Bankruptcy legal help

Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures and legal help for dealing with companies and for partnerships themselves.

What happens following bankruptcy proceedings?
Firstly, the bankrupt person is freed from overwhelming debts so he or she can make a fresh start, subject to some restrictions.  Secondly, the bankrupt’s assets are shared out fairly among the creditors.

Who can make a bankruptcy petition?
A court makes a bankruptcy order only after a bankruptcy petition has been presented. It is usually presented either:
- by the person who is in debt (debtor’s petition); or
- by one or more creditors who are owed at least £750 by the debtor and that amount is unsecured (creditor’s petition).

What if the debtor refuses to agree to the proceedings?

A bankruptcy order can still be made even if the debtor refuses to acknowledge the proceedings or refuse to agree to them. So it is in the debtor’s interest to co-operate fully once bankruptcy proceedings have begun. If the debtor disputes the creditor’s claim, he or she should try to reach a settlement agreement before the bankruptcy petition is due to be heard. Trying to do this after the bankruptcy order has been made is both difficult and expensive.

What happens when the bankruptcy order has been made?
When a bankruptcy order has been made, the bankrupt must:
- comply with the Official Receiver’s request to provide information about his or her financial affairs, and may have to attend at his or her office for an interview - the court will give you the address of the Official Receiver.;
- the bankrupt must also give the Official Receiver a full list of assets and details of what is owed and to whom (creditors);
- look after and then hand over assets to the Official Receiver together with all books, records, bank statements, insurance policies and other papers relating to the bankrupt’s property and financial affairs;
- tell the trustee about assets and increases in income the bankrupt may obtain during the bankruptcy;
- stop using the bankrupt’s bank, building society, credit card and similar accounts immediately;
- not obtain credit of £500 or more from any person without first disclosing the fact that the he or she is bankrupt;
- not make payments direct to the bankrupt’s creditors.

Do you have to go to court?

The bankrupt may also have to go to court and explain why they are in debt.
If he or she does not co-operate, they may be arrested..

When can bankruptcy be discharged?

The bankrupt will be automatically freed from bankruptcy (known as “discharged”) after a maximum of 12 months. This period may be shorter if the Official Receiver concludes his enquiries into your affairs and files a notice in court. Most debts that have not been paid will be written off.

What about informal arrangements?
The debtor does not have to become bankrupt just because he or she is in debt. It is possible to enter in to an informal arrangement by writing to individual creditors to see if a compromise can be reached on payment and a timetable. The disadvantage with an informal arrangement is that it is not legally binding so the creditors could ignore it later and ask to be paid in full.

To submit a case to law firms for legal help on bankruptcy issues, please go to the bankruptcy case page.

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