Bankruptcy is the formal court process for dealing with the financial affairs of insolvent individuals. A Bankruptcy Order can be applied for by the individual themselves or by a creditor who is owed more than £750.
When someone is declared bankrupt their financial affairs are dealt with by their Trustee in Bankruptcy; their assets are realised and the proceeds are paid to their creditors. What this means in practice is that if you have a house with equity in it, your family will need to pay your Trustee the value of the equity or you will risk losing the house.
Bankruptcies last for twelve months after which the bankrupt individual will be released from their debts and will be debt free. A bankrupt individual is allowed to work and earn a living, and may be required to make payments out of his or her income for a period of up to three years.
Bankruptcy is seen by many people as being a sign of their personal failure or an indication that they could not run a successful business, but the majority of the people we help are able to re-establish an even stronger business. In general, companies are declared bankrupt for a wide variety of reasons and in a high proportion of cases it is due to a changing business landscape, new competitors entering the market or other external factors.