Bankruptcy is a way to free you from significant debt after all other reasonable options have been exhausted. You can choose to present the bankruptcy petition yourself or it can be presented by a creditor that is owed at least £750 in unsecured debt. You need to be aware that a
bankruptcy order can proceed even if you do not acknowledge or agree to the proceedings therefore it is in your best interest to come to some sort of agreement or settlement before the bankruptcy petition is to be head in court. Doing so after the petition has been heard can be more time consuming, difficult and more costly.
Many of your assets will be sold and the proceeds will be distributed to your creditors. Your trustee may also apply for income payments order, also known as an IPO towards your bankruptcy, provided it does not leave you unable to meet your family's basic financial needs. Some of your assets may be protected, such as your home and vehicles as well as any items that you need for your employment or business. Clothing, furniture and other household necessities are also protected in most cases.
Some debt can not be erased through a bankruptcy, such as student loans, child support or court fines. If the majority of your debt falls into these categories you will need to consider another option.
During a bankruptcy there will be restrictions on how you must conduct and represent yourself in regards to your finances. For example, you may not be permitted to obtain credit without the court's approval. You are not permitted to conduct business in a name other than the name you were made bankrupt without telling those with whom you do business the name in which you were made bankrupt. Additionally, you can not hold certain public offices, act as a company director or a trustee of a charity or a pension fund.
Bankruptcy is a serious decision and should be used only as a last resort. You should fully explore all other options that may be available to you such as a repayment plan, IVA or debt consolidation loan.
