Bankruptcy Petition

A Bankruptcy Petition must be served in person unless you do not live in the UK. A Bankruptcy order may still be prevented but you must give at least 7 days notice of your intention to oppose it.

You may not use any reason for which a ruling has already been made against, unless there has been a change in circumstances.

Bankruptcy Petition - Petitioning for Bankruptcy

Bankruptcy orders are arranged by your local court. You’ll need to fill out the necessary forms - which can be obtained from your local court or from the government’s insolvency service website (www.insolvency.gov.uk). When proceeding with Bankruptcy you will need to provide details on the following:

  • Debtors - people, companies and organisation's that you are financially indebted
  • Assets - from bank accounts to valuable possessions

NB: It is a criminal offense to make a false statement on bankruptcy forms, so you must be truthful. It’s also illegal to sell any items, before the bankruptcy order or to hide any goods that you own. If you apply for voluntary bankruptcy you often have to pay a court fee of up to approximately £475 for the bankruptcy order.

The three routes to Bankruptcy

  • Creditor application to the court (Creditor Petition)
  • Debtor application to the court, i.e., applying for your own bankruptcy (Debtor Petition)
  • IVA Supervisor application to the court in the case where the debtor has defaulted on the IVA and alternative arrangement can't be agreed

The ruling court will review your bankruptcy case and will only grant you a bankruptcy order, if it feels that you have no other means of solving your debt problems, Such as a Debt Management plan or an IVA. Once the bankruptcy order is in place your accounts and assets will be frozen and the Official Receiver will investigate your finances in detail.

First they will interview you which will be followed by the provision of the bankruptcy order to various bodies, such as your local authority, land registry, insurance companies, banks, utility companies landlords and solicitors so that your debts and assets can be determined. Don’t be afraid of the interview, the purpose of the meeting is to ascertain your current financial status, not to make you feel any worse than you already do!

Once the Official Receiver has compiled a comprehensive report detailing your finances, a copy will be sent to all of your creditors and your assets will be divided equally among them.

You’ll normally be discharged from your bankruptcy order within a year, by which time your debts will either have been paid back or written off. But beware you could have to wait from 3 -5 years for the bankruptcy to be discharged.

Planning Bankruptcy

If you are planning to file bankruptcy then there are certain things that you should keep in mind.

The very first thing that you should do is; get in touch with a solicitor who specialises in bankruptcy. You will require specialist advice from someone who knows exactly what is required and what steps you need to follow:

  1. When you first meet, take along all of your financial papers, including bills that you owe, a verification of your income, and bank statements.
  2. Be very clear and forthright in calculating your entire debts, even the small ones.
  3. Bankruptcy is a long and a tedious process. It may affect your financial outlook for years. So make sure that this is the correct decision for your needs.

Debtor's Petition

Petitioning one's own bankruptcy requires the debtor to complete a bankruptcy petition form and a statement of affairs form.

The Statement of Affairs form requires detailed information, including valuation of assets which may not be know without seeking professional help. Information here is in addition the Official Statement of Affairs Guidance Leaflet as provided by the Insolvency Service.

For residents of England and Wales, both forms need to be completed and presented to the most local court with bankruptcy jurisdiction. For those not living or domiciled in England or Wales, the forms are to be presented to the High Court in London.

Application for Bankruptcy court fee exception

Court fees of £150 and a deposit of £325 must be paid by the debtor at this point. Court fees can be waived when the debtor is on benefits and total income does not exceed £15,050 per year. Also, the fee can be waived if undue financial hardship can be proven. Fee wavier is by application.

The Court may refer the case to an Insolvency Practioner in the case where the possibility of an IVA being be more appropriate course of action needs consideration.

Creditor's Petition

There are four types of Creditor Petition:

  1. Default in connection with an IVA
  2. Failure to comply with a statutory demand, debts payment due in the future
  3. Failure to comply with a statutory demand, debts payment currently due/overdue
  4. A court order execution returns unsatisfied. (e.g., bailiffs were not able to seize items of value)

For a bankruptcy petition to be presented to the court, 3 levels of criteria must be met:

  1. The debt must be at least £750 to the creditor petitioning for bankruptcy.
  2. The debtor must be domiciled or resident in England/Wales or be active in business in England or Wales, on the date of the petition, or at any time in the previous 3 years.
  3. The debtor must have no realistic ability to repay the debt, or refuses to pay the debt. This is proven by the debt being served with a statutory demand, which has not been set aside or complied to.

If the petition is based upon a Statutory demand, then only that debt, plus interest accrued since the date of the demand was issued can be included.

If the petition is based upon an unsatisfied execution of a previous court order, then full details must be given including the value of any sum rasied by the Court's sheriffs or Bailiffs.

IVA Supervisors' Petition

If you are currently within an IVA, your supervisor may petition the for your bankruptcy on the grounds that:

  1. You supplied false of misleading information on which the arrangement is based
  2. You have failed to maintain the terms to the arrangement

In this case, the IVA Supervisors can become the Trustee in the bankruptcy.

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