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Bankruptcy
Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. A first time bankrupt with debts will generally receive their discharge within one year after the date of the bankruptcy order.
Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases.
Please note that if your are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as an IVA or Debt Management Plan.
Bankruptcy is one way of dealing with debts you cannot pay.
The bankruptcy proceedings:-
- free you from overwhelming debts so you can make a fresh start, subject to some restrictions
- make sure your assets are shared out fairly among your creditors.
Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.
How are you made bankrupt?
An individual can be made bankrupt either in one of three ways:
- Voluntarily - By the debtor themselves.
- Involuntarily - By the creditor owed money (£750 Minimum).
- The supervisor or anyone bound by an IVA
A bankruptcy order can still be made even if you refuse to acknowledge the proceedings or refuse to agree to them. You should therefore co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditor’s claim, you should try and reach a settlement before the bankruptcy petition is due to be heard. Trying to do so after the bankruptcy order is made is both difficult and expensive.
What are the implications of bankruptcy?
- You lose control of your assets.
- You cannot obtain credit for over £500 without the permission from the lender.
- You cannot act as a company director.
- You cannot take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court.
- You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
- You may not practice as a Charted Accountant / Lawyer.
- You may not act as a Justice of the peace (JP).
- You may not become a member of the local authority.
- Your credit is affected for many years after the discharge
- You may be publicly examined in court.
What are the advantages of bankruptcy?
- For the person involved, bankruptcy provides relative peace of mind and possible automatic discharge after one year (or less in some cases).
- For the creditors, bankruptcy allows a full investigation of the debtor's affairs to be carried out.
For further information contact MFA Chartered Accountants and Insolvency Practitioners based in Fareham, Hampshire and covering , Portsmouth, Southampton, Havant, Locks Heath, Petersfield, Waterlooville, Horndean, Titchfield, Lee-on-Solent, Emsworth, Park Gate, Warsash and all surrounding areas.
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