The spectre of bankruptcy
As the economy takes a turn for the worse and debt levels are at an all time high, the c chickens have come home to roost for many people. Whether they have lost their well paid banking job which supported their lifestyle or unfortunate circumstances such as illness has led to them being unable to pay their debts, they find themselves looking at their options.
One option is bankruptcy when a person cannot pay their debts as they fall due. Whilst Individual Voluntary Arrangements (IVA) is best explored first, bankruptcy is invoked when all else fails. It is advised to talk to a lawyer at this point as going bankrupt has implications which are far-reaching in your life.
If you are a first time bankrupt with debts, you will generally receive a discharge one year after the date of the bankruptcy order – and there is sometimes a shorter discharge period.
The bankruptcy proceedings:-
Bankruptcy gives you the opportunity to make a fresh start and free you from your debt burden. And it makes sure that your assets are shared amongst your creditors. Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.
There are three ways to be made bankrupt:
§ * Voluntarily - By the debtor themselves.
§ *Involuntarily - By the creditor owed money (£750 Minimum).
§ *The supervisor or anyone bound by an IVA
You can still have a bankruptcy order against you even if you refuse to acknowledge the proceedings or refuse to agree to them. Full co-operation is advised once the bankruptcy proceedings have begun. If you dispute the creditor’s claim, you should try and reach a settlement before the bankruptcy petition is due to be heard. Trying to do so after the bankruptcy order is made is both difficult and expensive.
The penalties of bankrupcy are many but you do get peace of mind. However, it is important to get advice from a lawyer as there are many disadvantages. For example - You cannot take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court.
§
- - You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
§ - You may not practice as a Charted Accountant / Lawyer.
§ - You may not act as a Justice of the peace (JP).
§ - You may not become an member of parliament.
§ You may not become a member of the local authority.
§ - Your credit is affected for many years after the annulment.
§ --You may be publicly examined in court.
§ You lose control of your assets.
§ -You cannot obtain credit for over £250 without the permission from the lender.
§ - You cannot act as a company director.
§
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