Bankruptcy is a mechanism whereby a person can write off his debt, in return for handing his affairs to the Official Receiver. There are new rules in place now which means that someone subject to a Bankruptcy Order will generally be discharged from bankruptcy within 12 months.
A person can declare themselves bankrupt, on a Debtors petition, or be made bankrupt on a Creditors Petition. To make oneself bankrupt will cost £510 for the Official Receivers Deposit and court fee. A petition will need to be completed and a statement of affairs. These need to be handed in triplicate to the court staff. It may be necessary to book an appointment to make yourself bankrupt at some courts. At others you merely need to attend with the correct paperwork.
There are alternatives to bankruptcy which must be considered such as an IVA and debt management, but if bankruptcy is the option taken to eliminate debt, there will be post bankruptcy restrictions.
You will not be able to act as a company director for the time that you are bankrupt, or take part in local or national government. It will restrict practising as a solicitor.
When you are a bankrupt your affairs and assets are taken over by the Official Receiver. If you have a house, it will vest in the OR. If you wish you can have it transferred back to you for the OR’s fees plus £1 if there is no equity or for the value of equity of there is some. You must make sure that you can continue to pay the mortgage.
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