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For some reason we often hear how bankruptcy is surrounded in shame. This ludicrous notion seems to be perpetuated by the financial institutions in a bid to try and stop people from going bankrupt. For those who are stressed and suffering from sleepless nights bankruptcy is a breath of fresh air, a release.
Below, I've written a brief outline of what bankruptcy is and how to go about using it as a tool to solve your debt problems. Hopefully after reading it you'll understand why bankruptcy can help you and if you have any questions just ask in the bankruptcy forum.Bankruptcy is one solution - albeit often a "last resort" solution - to the problem of debts that you cannot pay. A bankruptcy order removes the burden of overwhelming debt allowing you to re-organise your finances - or, indeed, have them re-organised for you - without constant pressure from creditors or debt collectors; it can also guarantee that your assets are divided fairly amongst your creditors.
The bankruptcy process itself is straightforward, but - because of its implications in the short and long term - is not one that should be undertaken without due consideration of the alternatives.
A bankruptcy order can be made against you only after a bankruptcy petition is presented to a court - typically the High Court in London or your local County Court - by yourself, or a creditor, or creditors, to whom you owe £750 or more in unsecured debt.
If you intend to present your own bankruptcy petition - otherwise known as a "debtor's petition" - you need to complete both the petition itself which is your request to be declared bankrupt, and a statement of affairs which is your legal declaration of insolvency and includes details of your assets, liabilities, etc. In addition, administration, court and legal fees are payable although it may be possible for the court fee of around £150 to be waived by the court in certain circumstances, but an administration fee of around £450 is applicable in all cases.
Do bear in mind, however, that if you owe £750 or more to a single creditor, or two, or more creditors - who may jointly petition for your bankruptcy - a bankruptcy order can be made against you even if the amount, or amounts, that you owe are in dispute. If this does happen, it is important that you follow any instruction(s) that you may receive from the court, from the outset, but, at the same time, try to reach agreement with your creditor(s) over the amount owed before bankruptcy proceedings commence.
Not all bankruptcy cases require a hearing, but if a hearing is arranged, you, the debtor, will be expected to attend. If you live outside London, your case will typically be heard in your local county court, and handled, ultimately, by an Official Receiver, locally.
It is usually necessary for the Official Receiver, or an appointed trustee such as an insolvency practitioner, to ask your bank, building society, mortgage lender, insurance company, etc. for details of your assets and liabilities, so that an accurate picture of your financial situation can be formed.
If you have assets of, at least £2,000, and debts of less than £20,000 you may be referred to an insolvency practitioner for consideration for an IVA ("Individual Voluntary Agreement") as an alternative to a bankruptcy order. If a bankruptcy order is made, details of your bankruptcy may be reported in local, or national, newspapers and passed to various organisations, including HM Revenue & Customs, the Land Registry, etc..
For Scottish Bankruptcy Law