A Quick Guide to Bankruptcy
The first bankruptcy law in England was passed in 1542, with the term being an amalgamation of the old English word bankus referring a tradesman’s table and ruptus, meaning to break. At this time, bankruptcy was introduced as a solution for the creditor, not the debtor. Only traders could face bankruptcy, as a way of their creditor recouping what was owed.
In the present day, bankruptcy laws don’t just apply to traders; technically, if you owe in excess of Aï¿½750, you can be declared bankrupt. The bankruptcy should refer to your own personal debt; not the debt of a company or legal entity.
The initial step is the attainment of a bankruptcy petition. This must be filed at court; either by the individual debtor or this can be served by the creditor. If served by the creditor, this will follow a statutory demand. You will attend a hearing in court. Prior to the bankruptcy proceedings, you must not transfer any assets or hand over cash to family or friends.
From the moment the bankruptcy petition is filed in court, the date and time of your declaration of bankruptcy is recorded. You are then given a minimum time of 28 days to clear your debt.
Once you have incurred bankrupt status, your financial information is transferred to the Official Receiver, and you will cease to have any direct contact with your creditors. The Official Receiver is the government department who will assess your affairs. As the debtor, you will be required to attend an interview with the Official Receiver, conducted either face to face or perhaps via telephone. If it is deemed that your case is of simplicity, your affairs will be dealt with by the Official Receiver. If your debt problems are determined to be complex, your case will be passed over to a private insolvency practitioner.
The usual time period of a bankruptcy is 12 months. During this time, you are permitted to incur credit; however you must notify your creditor of your bankrupt status. You may also attain a bank account.
Throughout your bankruptcy, you should maintain employment; although you must not work as a director of a limited company or indeed in any managerial position. When the 12 months of your bankruptcy is over, your debts are removed, provided you have co-operated fully.