Bankruptcy Explained

Bankruptcy Explained

Bankruptcy is an option for any individual who cannot pay their debts “as and when they fall due”.

The Bankruptcy proceeding has two aims:

• To free the individual from the pressures of creditors (people they owe money to) to enable them to make a fresh start.
• To ensure that all assets (such as property and investments) are shared out fairly among the creditors.

Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.

If bankruptcy proceedings are taken against you, or you are thinking of making yourself bankrupt, you should seek your own legal or financial advice as soon as possible.

Bankruptcy is a serious matter. You will have to give up any possessions of value and your interest in your home. It will almost certainly involve the closure of any business you run and the dismissal of your employees. Bankruptcy will also impose certain restrictions on you. See disadvantages of bankruptcy for more details

There are many long term disadvantages associated with Bankruptcy which need to be considered before you make your final decision. It is recommended that you seek expert advice if you are considering declaring yourself bankrupt.

N.B. Are you sure declaring bankruptcy is the only option?

But before you apply for bankruptcy make sure you're certain you've considered the following questions:

• Would an IVA help me in my situation?
  
  
• Could a Debt Management Plan solve my problems?

• Last updated 05 January 2016