Bankruptcy is a last resort for those that really cannot find a way of paying their creditors. The consequences of a bankruptcy order are serious – if you are running a business, this will be closed and any staff will lose their jobs, your house will be at risk and you will be required to forfeit any valuable possessions.A bankruptcy can only be declared once a bankruptcy petition has been made. This can be presented by the debtor himself or by one of his creditors if they are owed at least £750. An official receiver will be appointed at this time; he will require the debtor to provide a full statement of his financial position, including assets and liabilities. The debtor will be required to hand over all assets and financial documentation, and he will no longer be entitled to use any bank or building society accounts. He must not attempt to obtain any further credit facilities and his bankruptcy will be reported in the local paper. It is vital for the debtor to cooperate fully with bankruptcy proceedings; any non-compliance can result in arrest. Unless any of the debts that the debtor has incurred are the result of criminal activity, once he has been declared bankrupt a Debt Discharge will free the debtor from all his debts.He will usually remain an un-discharged bankrupt for 12 months (except in the case of full payment of all debts).
During this time he will be unable to obtain credit of more than £250, or carry on in business without informing all interested parties of his bankruptcy order. Any surplus income will be used to pay creditors during the initial 12 months of bankruptcy and for a further two years afterwards. At the end of the 12 months, the bankruptcy will generally be discharged, allowing the former debtor to start afresh.
