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In recent years there has been a significant increase in the number of bankruptcies in the UK. Despite the increase, a relatively small percentage of debtors choose this option. The majority take the view that they bear some responsibility for their difficulties and wish to make an arrangement with creditors rather than filing for bankruptcy. Although debt managers may threaten to make a debtor bankrupt, at this moment it is an unlikely event. Trade creditors or the Commissioner for Taxes and Customs & Excise will use the threat of bankruptcy to chase a debt but banks, credit card companies etc are unlikely to use this avenue when pursuing a debt. Despite ones’ misgivings bankruptcy remains an option when dealing with a debt problem.

The procedure is as follows–

1. Declare oneself bankrupt at your local County Court.
2. The matter is then passed to the Official Receiver.
3. Complete a detailed questionnaire for the Official Receiver.
4. An interview is then held with the Official Receiver, its purpose is to establish the
   • cause of the problem,
   • the size of the problem,
   • value of any surplus income or realisable assets which could be collected on behalf of creditors.
5. If there is a surplus income or realisable asset the Official Receiver will appoint a trustee (an insolvency practitioner, accountant or solicitor) to realise the value of the assets or arrange an Income Payment Order.

Under new regulations first time bankruptcies will last for approximately 12 months. If an Income Payment Order is in place it will usually last for 36 months. If an asset has to be sold the Trustee will liaise with the bankrupt or their representative by convention. In the case of property the realisation of equity in a partly owned house will commence one year and a day after the declaration of date of the bankruptcy.

Please note, in the case of property a Charging Order will be placed on the property. It will be registered at the Land Registry and remain in place until the Official Receiver us satisfied.

Before declaring oneself bankrupt one ought to seek professional advice in order to understand the full implications of this course of action.

People appear to have emerged unscathed form bankruptcy, however it does not follow that the same will happen in every case.

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