INSOLVENCY & LAW
How to Make a Person Bankrupt
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Learn how to make a debtor Bankrupt, and let us guide you through the process.
When a debtor refuses to engage, creditors need effective, lawful leverage- not empty threats.
A Creditor’s Bankruptcy Petition is one of the most serious enforcement tools available. Where a debtor owes £5,000 or more, it allows the court to intervene, seize assets, and ultimately force payment through the bankruptcy process.
Before a Bankruptcy Petition can be presented, the law requires one critical step: service of a Statutory Demand. This formal demand gives the debtor 21 days to pay or reach an agreement. If they fail to do so, the creditor may proceed to issue a Bankruptcy Petition, at a court cost of £1,270.
Used correctly, this process often prompts swift engagement- long before bankruptcy becomes necessary.
Listen to the audio clips for information on Breaking down the end of the temporary insolvency measures.
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Bankruptcy order
The petition should be filed in the county court nearest to where the debtor resides. Moreover, a court may make a Bankruptcy Order if they decide the debtor is insolvent.
The procedure is almost identical to a Debtor's Bankruptcy Petition. Additionally, the debtor is summoned by the Official Receiver for an examination, and an trustee (insolvency practitioner / IP) may be appointed.
Bankruptcy can affect a person's credit rating for up to 6 years. Consequently, they'll be unable to obtain credit of more than £250 without disclosing their Bankruptcy. Additionally, Bankrupts still have to pay:
- Court fines
- Student loans
- Child maintenance
Moreover, the trustee may sell some of their most valuable assets to pay creditors.
Additionally, after the respondent (debtor) has been Bankrupt for 1 year, the trustee can try to seize and sell their home if there's significant equity in the property.
Call 0207 504 1300 now for advice on how to make an individual Bankrupt
Trustees
In Bankruptcy, the function of a trustee (licensed insolvency practitioner / IP) is comparable to that of an administrator or liquidator in the insolvency of a limited company. Moreover, irrespective of the procedure, the IPs main task is to realise assets to pay creditors. Additionally, aside from the tools of the debtor's trade, absolutely everything is up for grabs. Furthermore, creditors are free to remove and replace the trustee with an IP of their choice.
IPOs and IPAs
If a trustee believes the debtor has surplus income, they can ask the court to make the debtor pay up to 36 monthly payments into the Bankruptcy Estate via an Income Payments Order (IPO). Alternatively, a bankrupt can make these payments voluntarily through an Income Payment Agreement (IPA). Subsequently, the fee for both is approximately £150, which will be taken from their 1st payment.
BRUs and BROs
Additionally, Bankrupts who accept accusations of misconduct usually agree to sign a Bankruptcy Restriction Undertaking (BRU), which extends the Bankruptcy conditions for another 3 or 4 years. However, if a Bankrupt challenges allegations of misconduct, their trustee and creditors may apply for a Bankruptcy Restriction Order (BRO), which can extend Bankruptcy conditions for up to 15 years.
Discuss your situation in confidence
Financial distress is rarely straightforward, and delay often increases risk.
If you are a creditor, investor, or director affected by insolvency, speaking to an experienced insolvency expert can help clarify where you stand and what may follow.
Contact our team at Insolvency & Law to book a confidential consultation now