Bankruptcy FAQs

What is bankruptcy?

Bankruptcy is an option you can consider if your debts far outweigh your assets and you have no possible means to repay them. A first time bankrupt generally receives their discharge one year after the date of the bankruptcy order. There is even a possibility that the discharge period is less than one year. Bankruptcy should always be considered as a last resort. If you are faced with the prospect of bankruptcy, we advise you to first consider alternative debt solutions such as an IVA (Individual Voluntary Arrangement) or Debt Management Plans.

How can you be made bankrupt?

An individual can be made bankrupt by any of the following ways:

• Voluntary: This happens when the debtor declares bankruptcy.
• Involuntary: This happens when the creditors file bankruptcy charges against the debtor.
• The supervisor of an IVA: When the debtor fails to meet the terms of the arrangement the supervisor of the IVA can file for bankruptcy against him/her.

A bankruptcy order can also be made if you refuse to acknowledge the proceedings of the bankruptcy charges filed against you. Therefore, it is in your interest to co-operate fully once the bankruptcy proceedings have begun.

What are the implications of bankruptcy?

Bankruptcy has very serious and long-lasting consequences, some of which are:

• You lose control over your assets and property.
• You cannot act as a director of a company.
• You cannot participate, form or manage a limited company without the prior permission of the court.
• You cannot obtain credit for over £250 without the permission from the official receiver.
• You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
• Your credit rating is affected for many years after the annulment.
• You may be publicly examined in court.

What are the advantages of bankruptcy?

• Your creditors cannot approach you to repay the debt.
• You will attain discharge after one year or less, after which you can make a fresh start.