It’s an application made to court by a creditor when they’ve tried every other avenue to recover their debt from the debtor’s business.
This is an attempt to make the individual bankrupt and sell their assets to repay the debt.
It can only be considered by a court if the debt is greater than £5,000 and they can prove they’ve attempted to collect it through issuing a statutory demand and other enforcement action such as using bailiffs to seize assets for sale.
If the court allows the bankruptcy order then the Official Receiver takes control of the debtor’s assets to begin selling them to realise the debt. They will also judge if they have enough income to make monthly payments to creditors via an Income Payments Agreement (IPA).
Being declared bankrupt has a host of negative consequences and restrictions for a business owner including being unable to be a director for a period of time and being unable to access additional finance if required.
If you’ve received notice that a bankruptcy petition is going to be filed against you then it’s vital you take quick action. Get in touch with us and we’ll review your options because otherwise it’s probably going to end badly.
Get Expert Advice
Our team are here to help with your queries — contact us today.