Bankruptcy

Filing for Bankruptcy is a large step to take, and requires careful consideration. You must consider the effects on your credit rating and other aspects of your life.

Anyone can go bankrupt, including individual members of a partnership (although there are different insolvency procedures for dealing with companies and for partnerships themselves).

When becoming bankrupt, your assets will be shared out fairly among your creditors. Once this process is completed any remaining debt outstanding will be 'written off' and you will be able to 'start afresh' (although you will be subject to certain restrictions).

What is the Bankruptcy process

After first concluding that bankruptcy is the correct route (the options of a Debt Management Plan or Individual Voluntary Arrangement should always be considered), you will need to complete a Bankruptcy Petition. This petition will be filed with a local County Court and a court date will be set for an initial Bankruptcy Hearing. This hearing will decide whether or not a Bankruptcy Order should be made. If a Bankruptcy Order is made, you will then be declared bankrupt.

Once declared bankrupt, you will then have an appointment with the local Official Receiver who is charged with ascertaining whether you have anything to pay in your bankruptcy order. They will be looking to establish if you have any assets, such as property or a vehicle that has a higher value than required, that can be sold to raise money towards paying the creditors.

Bankruptcy usually lasts for a year (however in certain cases you may still be required to make payments for upto 3 years) and, at the end of the bankruptcy period, most debts are 'discharged' (written off). Therefore, if you are declared bankrupt, you are no longer liable for any outstanding debts documented in the bankruptcy proceedings.

What are the main implications of Bankruptcy?

You will lose control of your assets, the Official Receiver / Trustee being able to sell these (including your home and car). It is important to note that the Official Receiver / Trustee decides on what you do, and what you do not keep.
You will have to declare you are an undischarged bankrupt if applying for more than five hundred pounds credit.
You are restricted with regards to directorships and formation of any company.
You will be excluded from a number of professions including council and government office, certain forces, legal and financial professions. Other employers may not employ bankrupts.
Your bankruptcy will remain on your credit file for 6 years. It may affect your ability to obtain credit after this.
Your creditors will be able to carry out a full investigation into your affairs prior to the bankruptcy
The bankruptcy will be public information

Alternative Options to Bankruptcy

You should consider all the options before deciding to declare yourself as bankrupt. An IVA or a DMP may be far more suitable.

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Grass Roots

Bankruptcy

Alternative Options to Bankruptcy

Grass Roots (Financial) Limited