In the case of bankruptcy, a bankruptcy order is made by a court on the petition of either a creditor or debtor.   If you decide to make yourself bankrupt, Irwin & Company can arrange for a member of staff to attend court with you. At the court you will have to pay a fee and wait for a formal order to be granted. Once granted, the order falls within the public domain and is advertised in the London Gazette and a local newspaper. The Official Receiver becomes the receiver and manager of the bankrupt’s estate following the order. In some cases the Official Receiver may pass the management of your case over to a licensed insolvency practitioner.

Bankruptcy positives

  • You will be completely cleared of many debts but not damages for personal injuries; family liabilities, such as maintenance arrears; liabilities under criminal law, such as fines or frauds; student loans; and some benefits among others
  • You can be discharged in as little as a year but if you have previously been made bankrupt then discharge could take longer
  • You might not have to make any payments unless an income payment order is made

Bankruptcy negatives

  • People could find out, as the bankruptcy will be advertised in your local paper and the London Gazette
  • Any business you own may be closed down and the staff fired
  • You will lose valuable assets, including your home, if a partner does not buy your share
  • You lose any assets you gain during the bankruptcy, such as a legacy, insurance settlement or endowment
  • If you rent, your landlord will be told and the tenancy may be terminated, depending on your lease
  • All your bank, building societies and credit card accounts will be closed
  • Luxuries or expensive items you have leased or bought on HP may have to be returned to the owner
  • The bankruptcy remains on your credit history for at least six years, making it difficult for you to borrow money after you have been discharged
  • The trustee can ask the court to make an income payment order, which is the amount you must pay each month towards your debts
  • Bankruptcy fees are added to your debts
  • If you are guilty of misconduct while bankrupt, a bankruptcy restriction order (BRO) or bankruptcy restriction undertaking (BRU) may be taken out against you – these restrictions apply after you have been discharged and can last for up to 15 years
  • Bankrupts cannot do some jobs, for example, being a company director, a councillor or a member of parliament
  • Some debts, such as court fines or child maintenance, are excluded from a bankruptcy
  • If you have joint debts, the other person may still be pursued