What is bankruptcy?
Simply put, bankruptcy can occur when an individual's debts are greater than his or her assets. Declaring bankruptcy means an individual is financially insolvent and can be relieved of outstanding debts. It is often considered as a last resort for people with serious and ongoing debt problems.
Call Payplan free on 0800 280 2816 or use our Debt Help Form to submit your debt problem online for free Bankruptcy advice.
How are you made bankrupt?
A court will only make a bankruptcy order once a petition has been presented. A petition is made either by you or by a creditor to whom you owe an unsecured debt to the value of £750 or more.
Bankruptcy is normally dealt with in the High Court in London. However, there are local courts that can deal with bankruptcy orders. Once a bankruptcy order has been made, the official receiver will give written notice of the order to a number of organisations, this will include the order being advertised in the London Gazette (an official publication containing legal notices) and your local newspaper.
The Official Receiver, a civil servant in The Insolvency Service and an officer of the court will be responsible to protect your assets and for administering your bankruptcy from the date of the order. The official receiver will also act as trustee of your bankruptcy estate unless an Insolvency practitioner is appointed.
It is the responsibility of the official receiver to look into your finances prior and during the time the order is in place. They will report to the court and to your creditors. In the case of any suspected criminal offence made in connection to your bankruptcy, the official receiver will be obligated to report this also.
Insolvency practitioners are individuals who specialise in insolvency work. An insolvency practitioner can be appointed as trustee instead of the Official Receiver. He or she is then responsible for disposing of your assets and making payments to your creditors.
Some Implications of Bankruptcy
There are certainly disadvantages to bankruptcy that you must be aware of.
Once you are made bankrupt, you will no longer be in control of your assets. The only things you may keep are items or equipment needed for work or items needed for household purposes, i.e. bedding, furniture, clothing and other basic household necessities.
All other assets will be disposed of by either the IP (Insolvency practitioner) or the OR (Official Receiver) for sale, they will use the monies to go towards the fees and costs and expenses of the bankruptcy and then your creditors.
More Information on Bankruptcy
- What will happen to me during bankruptcy
- Bankruptcy Enterprise Act 2002
- How bankruptcy affects employment
- Questions on bankruptcy
For immediate and free debt advice please call Payplan free on 0800 280 2816 or use our Debt Help Form to submit your debt problem online.