Bankruptcy


Bankruptcy is when the court orders that the assets of a person, who is referred to as the debtor or bankrupt, are realised and distributed amongst his or her creditors.

It is a court procedure, which begins when a bankruptcy petition is issued.

If you think that any of the above is relevant to you , or if you have any other questions in respect of bankruptcy, please contact Angus Ashman, Partner and Head of Dispute Resolution.

What happens when someone is made bankrupt?

In a nutshell, the debtor’s assets and property vest in the Trustee in Bankruptcy, who is appointed to take over the financial affairs of the debtor.

This includes any money that the debtor has in his or her bank account and can include future money that the debtor receives.

In certain circumstances, it will also include the debtor’s house.

Who can petition for someone's bankruptcy?

A bankruptcy petition can be presented by a number of people.

This includes:

1. The debtor;

2. A creditor;

3. A supervisor of a failed IVA (or a creditor bound by that IVA); or

4. A temporary administrator or liquidator.

How do I make myself bankrupt?

The process is simple. All you have to do is fill in the relevant forms at your local county court and pay the corresponding fees.

Currently, it is £180 to petition for your own bankruptcy, but you also have to pay a deposit of £525.

The deposit is security for the payment of the Official Receiver’s fees.

How does a creditor make someone bankrupt?

A creditor can only present a bankruptcy petition if the debt that he or she is owed is equal to or more than £750.

The debt must be a fixed and agreed sum, and the debtor must be unable to pay the debt as it has fallen due.

Creditors normally serve a statutory demand, giving the debtor 21 days to make payment of the debt.

If no payment is received, the debtor is deemed to accept the debt and the creditor can then petition for the debtor’s bankruptcy.

It is currently £280 to present a creditor’s bankruptcy petition.

This is in addition to the Official Receiver’s deposit of £750.

What happens when someone is made bankrupt?

The Trustee in Bankruptcy takes control of the debtor’s assets and property as at the date of the bankruptcy order.

This can include the debtor’s home, but does not include the tools of the debtor’s trade, assets necessary for the basic domestic needs of the debtor and his or her family, assets to which the debtor has sole legal title and property held under protected tenancy.

If I am made bankrupt, what do I have to do?

You have a duty to co-operate with the Trustee in Bankruptcy.

This means that you have to provide the Trustee in Bankruptcy with information, attend meetings and undertake any other acts that the Trustee in Bankruptcy may require.

Can I commit any offences whilst bankrupt?

You can commit an offence if you:

1. Fraudulently do not disclose to the Official Receiver full details of the property that falls within your bankruptcy estate;

2. Conceal any property within your estate from the Official Receiver;

3. Remove any property with a value in excess of £1,000 from your bankruptcy estate;

4. Conceal, destroy or falsify any documents relating to your property and affairs;

5. Make a false, fraudulent or materially incomplete statement relating to your affairs;

6. Dispose of any property or interest that is comprised in your bankruptcy estate, or

7. Dispose of any property or interest at any time in the 5 years preceding your bankruptcy.

What next?

If you think that any of the above is relevant to you, or if you have any other questions in respect of bankruptcy, please contact Angus Ashman, Partner and Head of Dispute Resolution.