What is bankruptcy?
Bankruptcy is a process that an individual may face if they cannot pay their debts as they fall due or do not comply with the terms of their IVA.
To commence the bankruptcy a court makes a bankruptcy order on the basis of a bankruptcy petition. A petition is effectively an application for that person’s bankruptcy and is usually made by a Supervisor of an IVA following default, the individual themselves or by an unsecured creditor who is owed more than £750.
The Official Receiver has responsibility of administering the bankruptcy and protecting the assets from the date of the bankruptcy order. An Official Receiver is appointed by the Secretary of State and is an officer of the court. The Official Receiver will also act as Trustee of your bankruptcy estate unless an Insolvency Practitioner is appointed.
The Trustee in bankruptcy’s role is to realise the value from your assets and to distribute these fairly between people you owe money to.
The bankruptcy process releases the person from their debts (subject to a few exceptions) so they can make a fresh start. A first time bankrupt will generally receive their discharge one year after the date of the bankruptcy order although there is the possibility that in some cases the bankruptcy discharge period will be less than one year.
