The Business Debt Advisor

The Bankruptcy Process 

A petition is presented to court and the order will be made if the court official considers bankruptcy appropriate. This is followed by an interview with the Official Receiver, who initially acts as Trustee in Bankruptcy. The Official Receiver has 12 weeks to decide whether an independent Trustee should be appointed to manage the bankruptcy and if so, whether a meeting should be held to appoint the Trustee.

Period of Bankruptcy

As of 1st April 2004 the discharge period for bankruptcy is twelve months after the date of the Order or sooner if the Official Receiver reports that there are no matters of concern. For those individuals who were made bankrupt before 1 April 2004, they will get their discharge after three years or on 1 April 2005, whichever is sooner.

From April 1st 2004 second and subsequent bankruptcies will be treated the same as the first bankruptcies i.e. discharge 12 months after the date of the Order. That is unless the discharge is suspended because the bankrupt has not co-operated with their Trustee.

Effect of Bankruptcy

Whilst bankrupt, if you have surplus income after taking into account your reasonable costs of living, the Trustee will ask for a monthly contribution from your income for a period of three years; as such payments continue beyond the discharge period.

The assets excluded from bankruptcy comprise:

•  Personal possessions of a reasonable value
•  Tools of trade, for example a car that is needed for work purposes
•  Equity in property of £1,000

However, the Trustee can insist that assets which have a material value, for example expensive cars, furniture, etc are sold and replaced with cheaper alternatives.

The bankruptcy proceedings are advertised in a local newspaper and in the London Gazette.

Bankruptcy Restriction Orders "BRO"

New laws have been introduced which are aimed at protecting the public from those bankrupt's whose conduct has been either reckless or irresponsible. The Official Receiver can apply to Court for a BRO to be made against an individual and the effect of such an order includes:-

•  Obtaining credit beyond £500 without Court's permission is a criminal offence
•  The Bankrupt has to trade in the name under which the person he/she was adjudged bankrupt
•  Prohibition from acting as a director of a limited company

The period of the BRO will depend on how culpable the bankrupt is deemed to be. As a guide the period for the restrictions is imposed as follows:

•  2 - 15 years Culpable
•  5 - 10 years Reckless
•  10 - 15 years Dishonest

If you feel as though Bankruptcy is the only option and you would like us to assist you, we charge £500 +VAT for assistance in preparing the debtors petition paperwork and £600 +VAT if you have a pending charging order.

The Next Step

All debt solutions should be very carefully considered; we will always provide you with the best advice to ensure you get a soft landing away from the burden of debt. Simply forward your details on our Contact Form and we will contact you. Alternatively ring us on our FREEPHONE ADVICE LINE 0800 085 1825 to have a full consultation with our specially trained advisors.

The Insolvency Service has produced a guide: In Debt - Dealing with your creditors, to support those who find themselves in financial difficulty during the recession.

Financial Information

All debt solutions should be very carefully considered. Fees will be charged if a solution is taken in order for us to set up and maintain your plan - all fees will be outlined during your consultation. For further information on fees, please see the FAQ section of the different solutions available. Retained payment may place you further into arrears. The Debt Advisor complies with the Consumer Credit Act and you have a right to a cooling off period of 7 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term.