Bankruptcy is a legally binding solution that could help you clear debts you can’t afford to repay.
What is Bankruptcy?
Bankruptcy is a type of debt solution that helps people alleviate pressure surrounding mounting debts.
It works by freeing the individual from unsecured debts they cannot afford to repay and normally lasts for a period of 12 months.
It is often seen as a last resort when dealing with debt problems due to the impact Bankruptcy can have on a person’s life. For example, you could lose your home and valuable assets as a result of Bankruptcy.
Before you proceed with a Bankruptcy Order, you should always explore alternative debt solutions including Debt Relief Orders, Debt Management Plans and Individual Voluntary Arrangements.
The two aims of Bankruptcy:
- To free the individual of pressure from creditors (companies they owe money to) and to enable the individual to make a fresh start.
- To ensure that all available assets (such as property and investments) are distributed fairly amongst creditors.
If you apply for Bankruptcy, your assets will fall under the control of a Trustee, this will either be an Official Receiver (a civil servant and officer of the Court), or a licensed Insolvency Practitioner.
The appointed Trustee will become responsible for your assets which can include property, vehicles and valuable policies and maximising returns as a way of repaying creditors.
Once a Bankruptcy Order has been made against you, your creditors can no longer pursue you for payment.
Making payment to your creditors then becomes the responsibility of the Official Receiver (the Trustee).
Bankruptcy for businesses
If your business is in financial difficulty or you are a member of a business partnership and need insolvency advice, our sister company Baines & Ernst Corporate can provide specialist assistance.
