Bankruptcy is a procedure that is available when a person is unable to pay his/her debts. To be made bankrupt, the court must issue a bankruptcy order. There are several ways that bankruptcy proceedings can be commenced but the most common ways are by:
Bankruptcy and Insolvency
- A creditor's petition—any creditor (on their own or jointly with other creditors) who the debtor owes £750 or more to can apply to make the debtor bankrupt. Before they do this, they would usually serve the debtor with a notice called a statutory demand. If the statutory demand is not paid, this demonstrates that the debtor is unable to pay his/her debts and a bankruptcy petition can be issued by the creditor.
- A debtor's petition—the debtor can issue their own petition if they can show the court that they are unable to pay their debts.
- A supervisor's petition— this is issued by the supervisor of the debtor's individual voluntary arrangement (IVA) where the IVA is in default.
When a bankruptcy order is made the debtor’s financial affairs are put in the hands of the Official Receiver or a Trustee in Bankruptcy who will divide certain assets of the debtor amongst those creditors who have a valid claim. The debtor is usually discharged (freed) from bankruptcy after 12 months.
The bankruptcy will be advertised in the debtor’s local newspaper to enable creditors to make a claim against the debtor.
Bankruptcy still carries a social stigma and an undischarged bankrupt is excluded from certain occupations such as acting as a lawyer, accountant, MP, director of a company or a financial advisor.
Our insolvency litigation team is skilled and experienced in all aspects of individual insolvency litigation. We represent both bankrupts and their spouses, as well as dealing with a large amount of work for insolvency practitioners and Trustees in Bankruptcy. Our work includes:
- Issuing and setting aside statutory demands.
- Issuing and defending bankruptcy petitions.
- Bankruptcy annulment.
- Challenging the Trustee in Bankruptcy’s fees.
- Disclaimers and Validation orders.
- Bankruptcy and the family home including dealing with possession and orders for sale.
For a preliminary discussion please contact Amanda Mehlin or contact a member of the insolvency litigation team.