Getting familiar with bankruptcy and its effects

Important facts to help you understand all you can on bankruptcy.

08:11 05 November 2013

Bankruptcy is a form of insolvency where debtors are unable to pay off their debts on due dates. It can be imposed by creditors on debtors, or be self-petitioned by the debtors themselves.

Bankruptcy is usually associated with a certain cost - something in the range of £700 - before you can start proceedings and in certain instances, court fees are not included so as to trim down excess costs.

The impacts of bankruptcy

It is wise for you to first get advice from financial experts before coming up with the decision to follow the bankruptcy route. Bankruptcy is not the best option for tackling debts and so it is strictly down to your choice.

When your bankruptcy order is completed, you can start all over again within 12 months of your agreement and your debts will be written off. You also may not need to deal directly with your creditors anymore since an Official Receiver will be appointed by the court to take charge of your bankruptcy.

Who will get involved with the process?

In cases where the debtor instigates the bankruptcy proceedings, he’ll need to complete a statement of affairs and bankruptcy petition forms disclosing his assets and personal details which may include bank society accounts. If he gets an approval by the court, a registered insolvency practitioner or an official receiver will be appointed to act as his trustee. This trustee can take charge of appointments with creditors.

What is its duration and what about my partner?

Discharge can happen within a year or two if you cooperate fully and if you have a partner that you are concerned about, so long as you have no joint debts with them, they will not be affected; but if the opposite is the case, then your creditors have the right to take action against those other partners under Joint & Several liability.