- Are you a creditor in formal insolvency proceedings?
- Company Voluntary Arrangements
- Compulsory Liquidations
- Corporate Insolvency
- Creditors Voluntary Liquidations
- Individual Voluntary Arrangements
- Members Voluntary Liquidations
- Partnership Insolvency
- Personal Debt
- Rescue and Recovery
Personal Debt and Bankruptcy
A Bankruptcy Order can be made by the Court on the petition of the debtor or one or more creditors owed £750 or more.
Upon the Order being made all assets (including the matrimonial home) of the bankrupt automatically ‘vest’ in the Official Receiver and subsequently in any trustee in bankruptcy appointed by the creditors or the Secretary of State. The bankrupt’s interest in the matrimonial home will need to be realised by the trustee, if it is worth more than £1,000, and he or she must do so within three years of the bankruptcy. If no agreement can be reached with the bankrupt or a third party to purchase that interest, the trustee will apply to Court for an Order for Possession and Sale of the Property.
The bankrupt’s other assets may also need to be realised by the trustee for the benefit of the estate, although standard household contents and tools of the trade are often exempt.
Since the introduction of the final provisions of the Enterprise Act in April 2004 bankruptcy now usually lasts for a maximum of twelve months, and often less.
There are various restrictions placed on an un-discharged bankrupt. The bankruptcy is advertised in newspapers in the locality of where the bankrupt trades, or if a non trading bankrupt in the locality of where he or she lives.
If there are sufficient assets available, not only will all creditors be paid in full with statutory interest from the date of the bankruptcy until they are paid, but the bankrupt will also be expected to pay from the estate, the costs of the petitioning creditor, the Official Receiver, the trustee and Department of Trade fees calculated at 17% of all realisations in excess of the first £2,000.
Therefore a bankrupt with assets may wish to consult with a Licensed Insolvency Practitioner early on, in order to ascertain whether or not an IVA would be more suitable. It is not too late to enter into an IVA after bankruptcy providing the debtor is still undischarged. An IVA cannot be entered into post discharge in respect of Bankruptcy debts. It is however considerably more costly after a trustee has been appointed and therefore the earlier advice is sought, often the cheaper it is.