Bankruptcy process in England
Bankruptcy is one way of dealing with debts you can’t pay. The three main principles of UK bankruptcy proceedings are:
- Assets of the person made bankrupt are shared out fairly among his or her creditors;
- Financial and business affairs of the person made bankrupt will be dealt with by the Trustee or Official Receiver;
- The person made bankrupt is subject to certain restrictions and discharged (freed) from his or her debts after a period of time, usually 12 months.
For the person made bankrupt, the main disadvantages of bankruptcy are:
- The bankrupt’s assets are included in the bankruptcy estate and may be sold – this may include their home and vehicle;
- An undischarged bankrupt cannot obtain credit for more than £500 without disclosing his or her bankruptcy to the prospective creditor;
- The bankrupt’s credit score will be affected and will continue to be affected for five years after discharge;
- The Official Receiver or Trustee may apply for an income payment order, which will continue for three years.
There are number of other restrictions:
- The bankrupt’s details will be held on the public Individual Insolvency Register and published in the London Gazette;
- Certain professions will not allow an undischarged bankrupt to continue practicing as a member of their profession (chartered accountants, lawyers, financial advisers, bank managers, police officers and members of the armed forces).
Also, an undischarged bankrupt can’t
- Act as a company director;
- Take any part in the promotion, formation, or management of a limited company without the permission of the court;
- Act as a Justice of the Peace, school governor or insolvency practitioner;
- Become a member of the Local Authority;
- Trade in any business under any other name than that used at the time of the bankruptcy order except with the permission of the court.
A bankrupt may be subject to a Bankruptcy Restriction Order (BRO) for between 2-15 years if he is found to be culpable, reckless or dishonest with his or her financial affairs. Also there are some powers for the Trustee or Official Receiver to take criminal action against bankrupts e.g. if they have committed fraud.
For further information about bankruptcy we recommend the Insolvency Service’s booklet “Guide to bankruptcy”.
Contact us now and see how we can help you. All enquiries are treated in the strictest confidence.
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Note that if you are made bankrupt, your property and assets could be at risk and your credit rating will severely be affected for six years.
Our initial advice is free. However, if you decide to go ahead with our bankruptcy assistance service fees will be payable. The fees will be discussed and agreed with you at the outset of the service.
You have a 7 working days cooling off period from the commencement of our services. If you decide to cancel our service during this time, we will refund you any fees paid to us that are cleared funds.
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