Bankruptcy

Bankruptcy

The purpose of bankruptcy is to bring relief from severe pressures for those individuals who have no possibility of repaying their debts even over a long term. Additionally it can be used as the “last resort” Court procedure to extract eventual payment by a creditor who is owed money in excess of £5,000.

A person applying for their own bankruptcy will be insolvent and unable to pay their debts. The benefit will be that their financial affairs are immediately taken over by the Official Receiver who will communicate with the creditors, taking the pressure away from the debtor to enable them to have a second chance at reordering their financial affairs.

When a person becomes bankrupt, control of their assets will often vest in a Trustee who realises them for the best possible value and distributes the proceeds to the bankrupt’s creditors.

There are also drawbacks and restrictions to consider so the decision on filing for bankruptcy should never be taken lightly. Additionally, those who have very little by way of assets and liabilities below £20,000 can restructure their finances via a Debt Relief Order and avoid bankruptcy. We advise individuals on whether bankruptcy is right for them based upon their personal circumstances.