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Are you thinking about bankruptcy?



Do you know enough about bankruptcy to make an informed decision that you will not later regret.



About bankruptcy

The Enterprise Act 2002 (Act) has by definition of its name suggested the Act was enacted to encourage entrepreneurialism. In achieving this objective the treatment of individuals declared bankrupt changed significantly.Since the introduction of the Act it has now become easier to enter into bankruptcy. Also, the period of bankruptcy has been reduced from 3 to 1 year. It is even possible to be discharged from bankruptcy after 6 months!

Bankruptcy no longer carries with it the stigma it had prior introduction of the Act. Bankruptcies in England and Wales have significantly increased in popularity owing to the short period of bankruptcy and early discharge.

How does it work?

You can be declared bankrupt voluntarily (your own choice) or compulsory (your creditor's choice) if you have debts exceeding £750 that you are unable to pay.

Bankruptcy is made by order of the court. Upon the making of the order all property that you own will now vest with the trustee, a court appointed official, charged with taking control of your assets for the benefit of your creditors.

The trustee has a legal duty to sell your assets sufficient to pay all your creditors and the trustee's expense. Once this has been achieved the trustee's appointment is complete and you are discharged from the bankruptcy. In any event discharge from bankruptcy is automatic on the 12th month of the bankruptcy provided you have been cooperative with the trustee. This is regardless if your assets were insufficient to pay your creditors.

What are the advantages?

  • You will be free from your debts on the making of the bankruptcy order (some debts will survive bankruptcy).
  • You may get to keep your family home if you own or co-own it
  • You may get to keep your car
  • You get to keep assets necessarily required to earn your income
  • You get to keep all personal belongings that do not have a value exceeding £1,000

What are the disadvantages?

  • It may be necessary for the trustee to sell your family home if you own or co-own it
  • Some debts (student loans, child maintenance, criminal fines, etc) will survive the bankruptcy
  • You will not be permitted to be a director in a limited company
  • You may be excluded from practising in certain professions
  • You will not be allowed to obtain credit over £250 without disclosing you are bankrupt
  • You may be required to pay part of your income for up to the next three years into your bankruptcy estate for the benefit of your creditors
  • Adverse effect on your credit file for 6 years

How we can help...

We are able to advise if bankruptcy is a viable course worth taking given your particular circumstance. There will be several matters to consider; will you lose your family home and or be compelled to pay part of your income to your creditors.

In many instances bankruptcy should be considered as a viable option, especially if you will get to keep your home and all your income.

You may be pleasantly surprised that being made bankrupt could actually help you more than you could ever imagine.