Bankruptcy Explained

Bankruptcy is just one of several options to be considered when an individual cannot repay their debts. If your client is faced with the prospect of bankruptcy they should always look at alternatives as soon as possible such as an Individual Voluntary Arrangement* or a Debt Management Plan*. Bankruptcy can free people from overwhelming debts to give them a fresh start on their finances, however it is a serious commitment and should not be entered into lightly.

The Bankruptcy proceeding has two aims:

1. To free the individual from the pressures of creditors (people they owe money to) to enable him or her to make a fresh start.
2. To ensure that all available assets (such as property and investments) are distributed fairly among 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.

The Courts are officially responsible for making a bankruptcy order against an individual, although this is usually done at the request of either the individual or one of his/her creditors.

The assets of the bankrupt individual then fall under the control of a Trustee, this will be either the Official Receiver
(a civil servant and officer of the Court), or a licensed Insolvency Practitioner. Whoever is appointed becomes responsible for uncovering as much as possible about the debtor’s assets and liabilities and then maximising returns for the creditors from the assets available, within certain guidelines.

Once a bankruptcy order has been made against the debtor, the creditors can no longer pursue them for payment. Making payment to the creditors then becomes the responsibility of the Trustee, however, if mortgage payments are not made, the lender may enforce proceedings to repossess any property.

Speak to the Chase Debt Solutions expert advisors today on 01843 296666 or complete the form on the right of this page to get immediate advice on the alternatives to bankruptcy.