Personal Bankruptcy

Personal bankruptcy is a form of insolvency and only suitable if you cannot pay back your debts in a reasonable timeframe.

If you enter a bankruptcy then any assets you own such as your car or your house would normally be sold to pay off your debts.


It’s that serious and should only be considered as a last resort.


All unsecured debts would be written off but anybody emerging from personal bankruptcy will still be subject to certain restrictions for some time afterwards.


Any individual can apply to declare themselves bankrupt through presenting their own bankruptcy petition and creditors can also issue bankruptcy petitions against individuals if they’re owed more than £5,000.


If a bankruptcy order is successful then the case is handled initially by the Official Receiver who will then become a Trustee in bankruptcy.


They’d look to sell your assets to raise whatever funds they’re able to distribute to creditors.


They’ll also conduct an interview and complete a bankruptcy questionnaire to determine what assets you have, whether there’s been any asset disposals in the past five years or if any transactions with connected parties have taken place to attempt to hide them.

Frequently asked questions about Personal Bankruptcy

What are the effects of a personal bankruptcy?


In the best case scenario for an individual, the bankruptcy will last a year until they are officially discharged.


This is not automatic and depends on them meeting their various obligations including cooperating fully with the Trustee, attending any meetings they’re required to and submitting all required documents and records.


Failure to cooperate with any requests from the Trustee could lead to the discharge being suspended until the bankrupt complies.


An undischarged bankrupt cannot act as a company director or obtain credit. Additionally depending on the circumstances that led to the bankruptcy, they could also be subject to a Bankruptcy Restriction Order (BRO) with further restrictions imposed for between 2 to 15 years for the worst offences.


There are also scenarios where the bankruptcy order could be annulled before discharge.


If the owed debts are paid off in full or if the debtor can prove that they were solvent and the order should not have been made.


If creditors approve an IVA then this would also see an annulment as it would provide a better return for them than bankruptcy.