A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
Bankruptcy Advice
Bankruptcy is a personal insolvency procedure for individuals who cannot pay their debts. It provides a fresh start: most debts are written off, and you are typically discharged (freed from the debts) after 12 months.
Bankruptcy is a serious step with significant consequences, but for some people it is the right and most honest way to deal with unmanageable debt. Understanding the process and the implications is essential before deciding.
How Bankruptcy Works
- Petition - You (or a creditor) apply to the court for a bankruptcy order.
- Order made - The court declares you bankrupt and appoints an Official Receiver or trustee.
- Assets - Your assets (with some exceptions) are realised for the benefit of creditors.
- Discharge - You are usually discharged after 12 months, and most remaining debts are written off.
What Bankruptcy Means
- Your assets - You may lose assets of value, including potentially your home.
- Your income - You may be required to make monthly contributions from income for up to three years via an Income Payments Agreement.
- Your career - Some professions and roles are restricted for undischarged bankrupts.
- Your credit - Bankruptcy appears on your credit file for six years.
- Public record - Bankruptcy is advertised publicly.
When Bankruptcy May Be the Right Option
- You have debts you genuinely cannot repay
- You have no realistic way to make the monthly payments an IVA would require
- You have few assets to protect
- You want a clean break and a fresh start within a defined period
Bankruptcy vs an IVA
Bankruptcy is usually quicker (discharge in 12 months) but puts your assets - including your home - at greater risk. An IVA lasts longer (5 to 6 years) but you keep your home and can write off part of your debt. The right choice depends on your assets, income, and circumstances.
Speak to a Licensed IP
Bankruptcy is not a decision to take lightly. Our Manchester-based practitioners will assess your situation honestly and tell you whether bankruptcy, an IVA, or another option is right for you - free and confidential.