Personal Insolvency
Bankruptcy
Bankruptcy is the ultimate sanction against individuals who cannot agree a solution with their creditors; it’s also a final solution to an individuals’ debt problems.
Either you or your creditors can petition for your bankruptcy.
The Problems
It’s a solution that many people fear and it’s true that a bankrupt will suffer a number of problems:
- It’s a public process and may be advertised in the local press
- It’s a legal process and you will need to attend your local court and an interview with the Official Receiver
- You will be subject to the powers of the Official Receiver who will review your case and a Trustee in Bankruptcy who will sell certain types of your assets
- If you have spare income you will be expected to pay a proportion to your creditors every month for three years - and if you won’t agree, a court will make you do so
- If there’s equity in your property this will have to be dealt with, if necessary by the forced sale of your house
- …and there are a list of bankruptcy offences and sanctions if you don’t cooperate, including arrest and imprisonment
…But like all legal processes, it’s not all bad news. Bankruptcy may be the best solution for some people and if it’s the solution for you, that’s what we will recommend. You can petition for your own bankruptcy; the details are set out on the Resources for Individuals page. We can help you through every step and will come with you to attend Court and meet the Official Receiver if you wish.
- Your pension rights are protected
- You will clear all of your debts and can make a fresh start (bar certain types of debt, including fines, student loans and family court orders)
- Your creditors cannot pursue you any more; they claim from the Official Receiver, not you. Letters, phone calls and the risk of a bailiff visit all disappear.
- Your ordinary domestic assets and any tools of your trade, if you are self-employed, are protected
- There’s always a deal to be done with the Official Receiver or Trustee in Bankruptcy for your assets or the equity in your house