Personal or Corporate bankruptcy proceedings - explained

There is a stigma associated with bankruptcy in the UK that is completely out of step with the view taken in western Europe or in the US.

Here we try to debunk the myths and explain how we may be able to help you recover after you reach the stage where you or your company may be insolvent.

Back to main Insolvency & Bankruptcy page.

Insolvency is the inability of an individual,  business or other entity to pay debts when they are due.

Bankruptcy is the process that allows an individual, business or other entity to legally declare its inability to pay creditors.

In many countries filing for bankruptcy is considered a positive step towards dealing with insolvency allowing an individual or company directors  to recover their status and get on with the rest of their lives.

Bankruptcy can be a process that provides a second chance - it is not the final nail in the coffin. Nor is it something to be taken lightly.

A few key points:

1. You do not necessarily have to become bankrupt just because you are in debt. There are a few viable options that you should carefully consider namely Individual Voluntary Arrangements (IVA's) and debt rescheduling.
2. If you have received a petition or have decided to file for bankruptcy then you should seek advice from someone qualified to help you - an insolvency solicitor would be a good option.
3. Bankruptcy petitions are made in the local county courts (High Court in London).
4. Once a Bankruptcy Order has been made this will be published in the local press. This can cause anxiety for the bankrupt but is designed primarily to communicate the order to potential or actual creditors.
5. The Official Receiver (or) has the job of administering your bankruptcy and protecting your assets from the date of the order.
6. The Official Receiver will review your financial affairs and report to Court. They also act as the intermediary with known creditors. If preferred a licensed Insolvency Practitioner (IP) can act instead of the Official Receiver.
7. When a Bankruptcy Order has been made against you:

• You must cooperate fully and comply with any requests from the Official Receiver or the insolvency practitioner concerning your financial affairs.
• You must provide details of all known assets and a list of creditors (people to whom you owe money) - You must stop using your bank account or similar account straight away
• You must not make payments to your creditors outside of the arrangements agreed upon during the proceedings.
• You will no longer control your assets.
• You can usually retain items such as tools of trade, vehicles and equipment used for employment. Clothing Bedding furniture and items you / your family need in the home.

Useful resources:

• http://www.cccs.co.uk
• http://www.citizensadvice.org.uk
• http://www.insolvency.gov.uk
• http://www.insolvency-practitioners.org.uk
• http://www.insolvencypractices.org.uk
• http://www.bankruptcyadvisoryservice.co.uk
• http://www.moneybasics.co.uk
• http://art.com

Our experienced PPI solicitors can also help you claim back your payments if you believe that you were mis-sold a PPI policy.  Why not get a rough idea what you could claim back using out PPI compensation calculator.

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