You may feel distressed at the thought of declaring yourself bankrupt, but within certain circumstances, bankruptcy may be your only option.

What is Bankruptcy?

The bankrupcty proceedings free you from overwhelming debts so you can make a fresh start, subject to some restrictions; and makes sure your assets are shared out fairly among your creditors. anyone is able to go bankrupt, including individual members of a pertnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.

How am I made bankrupt?

A court will make a bankruptcy order only after there has been a bankruptcy petition presented. It is usually either presented by yourself (debtors petition) or by one or more creditors which are owed a minimu of £750 by you and that amount is unsecured (creditors petition). A bankruptcy order can be made even if you do not acknowledge the proceedings or refuse to agree to them. Once the bankruptcy proceedings have begun you should cooperate fully. If you dispute the creditors' claims, you should try and reach a settlement figure before the bankruptcy is heard, this process after the bankruptcy has been heard is both difficult and expensive.

Where is the bankruptcy order made?

Bankruptcy petitions are usually presented at the High Court in London or at a county court local to where you trade or live. A petition can be presented against you even if your are not present in England or Wales. Once the bankruptcy order has been made, it is advertised in "The London Gazette" (an official publication which contains legal notices) and in a local national newspaper. In addition the official receiver will give written notice of the order to a number of organisations.

Who will deal with my bankruptcy case?

Option 1 - An official Receiver

An official receiver is a civil servant and is appointed by the court. The Official receiver ahs the responsibility of administrating your bankruptcy and protecting your assets from the date of the bankruptcy order. He or she will also act as trustee of your bankruptcy estate unless an insolvency practitioner is appointed.

The official Receiver is resopnsible for looking into your financial situation before and after the bankruptcy. He or she may report to the court and has to report to your creditors. The Official Receiver must also report any matters which indicate that you may have committed criminal offences in connection with your bankruptcy or that your behaviour may have been dishonest or you have been in some way to blame for your bankruptcy.

The Official Receiver will give notice of the bankruptcy order to local authorities, utility suppliers, courts, sheriffs, bailiffs, National Savings and Investments (premium bonds(, the Land Registry and any relevant professional bodies. Enquiries will also be made of banks; building societies; mortgage, pension and insurance companies; solicitors, landlords and any other persons or organisations who may be able to provide details or any assets or liabilities that you have, or ahve had, an interest in. Third parties will also be asked about any other matters relating to your bankruptcy.

Option 2 - An Insolvency Practitioner

Insolvency practitioners specialise in insolvency work. An insolvency practitioner, who must be authorised by either the Department of Trade and Industry or the appropriate professional body, can be appointed trustee instead of th eOfficial Receiver. He or she is then responsible for disposing of your assets and making payments to your creditors.

How Will bankruptcy affect me?

Once a bankruptcy order has been made, you must comply with the Official Receiver's request to provide information about your financial affairs. The Official Receiver may request that you attend at his or her office for an interview. If the Official Receiver does not ask that you attend at the office for an interview, you will be sent a letter which will set out what is required of you. Again it is likely that you will be asked to complete a questionnaire. You should note that in either circumstance, any questionnaire completed before the bankruptcy order, supplied to you by an adviser or another thirs party, will not be acceptabe;

1. Give the Official Receiver a full list of your assets and details of what you owe and to whom (your creditors)

2. Look after and then hand over your assets to the Official Receiver together with all your books, records, bank statements, insurance policies and other papers relating to your property and financial affairs.

3. Tell your trusttee about assets and incresases in income you obtain during your bankruptcy. (By law, you must inform your trustee of any property which becomes yours during the bankruptcy. Such property includes lump sum cash payments that you may recieve, for exmaple redundancy payments, property or money left in a will).

4. Stop using your bank, building society, credit card and similar accounts straight away.

5. Do not obtain credit of £500 or more from any person without first disclosing the fact that you are bankrupt.

6. Do not make payments direct to your creditors.

You may also have to go to court and explain why you are in debt. If you do not co-operate, you could be arrested.

How Long does bankruptcy last?

If you were made bankrupt on are after 1 April 2004 you will be automatically freed from bankruptcy (known as "discharged") after a maximum of 12 months. This period may be shorted if the Official Receiver concludes his enquiries into your affiars and files a notice in court.

If you have been an undercharged bankrupt at any time during the 15 years before the current bankruptcy (unless the previous banruptcy has been annulled) you will be discharged automatically on 1 April 2009. Or you may ask the court for a discharge five years after the date of the bankruptcy order, but the court may refuse or delay your discharge, or grant it conditionally on terms requiring you to make some payments out of your income. You will also become free from bankruptcy immediately if the court annuls (cancels) the bankruptcy order; this would normally happen when your debts and the fees and expenses of the bankruptcy proceedings have been paid in full or the bankruptcy order should not have been made. On the other hand, if you have not carried out your duties under the bankruptcy proceedings, the Official Receiver may apply to the court for your discharge to be postponed. If the court agrees, your bankruptcy will only end when the suspension has been lifted and the time remaining on your bankruptcy period has run.

Who do I need to speak to?

At Hamilton Wentworth, we can put you infront of the right people to provide a free consultation to help assess your situation. Contact us on the details provided.