Bankruptcy Explained

Bankruptcy is an option that has to be considered when an individual cannot repay their debts. It is one way of dealing with your debts but it is the one way that you should save till last. What is meant by this is that if you are faced with the prospect you should always look at the alternatives as soon as possible.

Bankruptcy proceedings have two main aims. These aims are to free an individual from the pressures of creditors; it frees them from overwhelming debts in order for them to make a fresh start; however this fresh start is subject to some restrictions. Bankruptcy also makes sure that your assets, including property and investments, are shared out fairly among your creditors. Once a bankruptcy order has been made against you then your creditors can no longer pursue you for payment. The payment then becomes the responsibility of the trustee. Once your bankruptcy proceedings have begun you should co-operate fully.

Anyone can go bankrupt whether you are an individual or a member of a partnership; however there are different insolvency procedures for dealing with companies and for partnerships themselves. It is the job of the courts to make a bankrupt order against an individual, although this is done at the request of either the individual or one of his/her creditors.

Once a bankruptcy procedure has started to take place the assets of the individual who is involved fall under the control of a trustee. This trustee with either be the Official Receiver, who is a civil servant and officer of the court or a licensed Insolvency Practitioner, which ever person is appointed as trustee becomes responsible for uncovering as much as possible about the debtor’s assets and liabilities and then they will maximise returns for the creditors from the assets which are available. All of this is however performed within certain guidelines.

You can either declare yourself bankrupt, which is known as voluntarily bankruptcy or your bankruptcy proceedings could be started involuntarily. Involuntarily proceedings can only happen when you owe your creditor more than £750. However when your proceedings are started your bankruptcy petitions are usually presented either at the high court in London or at a County Court, which is nearest to where you live or work. A bankruptcy petition can be presented against you even if you are not present in England or Wales at the time as long as you normally live there.

One aspect of bankruptcy that many people don’t realise is that there are fees associated with bankruptcy proceedings. One of these fees is the court fee, which equals out to £120; however in some circumstances the court may ignore this fee, for example if you are on Income Support. If you are not sure whether you qualify for a reduction in the fee, or if you are exempt from paying the fee, Court staff will be able to advise you. You will also have to pay a deposit of £250 towards the cost of administering your bankruptcy. This deposit is payable in all cases.

For more information about Bankruptcy it is advised that you seek professional legal advice from people who will be able to guide you through the entire process.

Helen is the web master of Edge of Bankruptcy, providing you with specialist advice concerning all aspects of Bankruptcy and the proceedings involved.

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