Bankruptcy is one way for individuals to deal with debts they cannot pay.
What You Need To Know
What Is Bankruptcy?
- An individual can make themselves bankrupt by submitting an online application to the Insolvency Service.
- A creditor owed at least £5,000 can petition for an individual’s bankruptcy by serving a petition on the debtor which may result in a Bankruptcy Order being made in Court.
- Following the making of an order the Official Receiver, a Civil Servant, is automatically appointed to act as Trustee in Bankruptcy.
- An Insolvency Practitioner from a private practise may subsequently be appointed to take on the appointment, possibly at the request of creditors.
- All the debtor’s assets “vest” in the Trustee.
What Are The Advantages Of Bankruptcy?
- The individual’s debts are written off and no interest is payable.
- Automatic discharge after 12 months.
- Creditor’s approval or agreement is not required, unlike with an IVA.
What Are The Disadvantages Of Bankruptcy?
- It involves the sale of any valuable assets, potentially including the matrimonial home.
- It may result in a 3 year Income Payment Order.
- The automatic discharge after 12 months may be suspended if there is a lack of cooperation with the Trustee in Bankruptcy.
- During the period of bankruptcy there are certain restrictions including not being able to act as a Director, incur levels of credit as set down in statute, carry on in certain professional positions etc.
- High costs that result in very low returns to creditors.
- Certain debts are not included, such as Student Loans, Court Fines and debts owed under family court proceedings.
- Seriously affected credit rating.
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Next Steps Together
DSi provides expert advice to businesses and individuals encountering financial difficulty. We are a friendly yet professional firm, offering a spectrum of financial solutions to insolvency.
Our experienced team are here to help and do understand that financial problems can be extremely stressful. Our aim is to guide you through this giving straight forward and honest advice.
If you would like to discuss any aspect of personal insolvency please don’t hesitate to contact DSi Business Recovery to arrange a Free and Confidential meeting on 01924 790880
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