FAQs: Banking and Insolvency
What do I do if I receive a Bankruptcy Petition?
A Bankruptcy Petition is a significant document. You should immediately seek advice as to ways in which the Petition can either be settled if the debt is due, or resisted if there is a dispute as to the debt demanded.
What is a Statutory Demand?
A Statutory Demand is a document which in most cases must be served by someone who wishes to make another person bankrupt. If you receive a Statutory Demand you must either comply with it, i.e. pay the debt if it is properly payable or seek to have the Statutory Demand set aside by the Court. There is a strict timetable which applies.
Is it possible to make myself bankrupt?
It is possible to make yourself bankrupt by submitting the relevant forms and papers to the Court. The County Court staff for your local Court will be able to assist you with this process.
Who is the Trustee in Bankruptcy?
The Trustee in Bankruptcy is a person licensed by the state to act for the benefit of creditors in realising the assets of a bankrupt and distributing those assets amongst the creditors.
Who is the Official Receiver?
The Official Receiver is a government employee who can in certain cases act as your Trustee in Bankruptcy, or who may in other cases convene a meeting of creditors for the purposes of allowing your creditors to decide upon the person who they wish to administer your affairs. That person will become your Trustee in Bankruptcy.
What are the consequences of a bankruptcy?
Subject to certain exemptions, bankruptcy means that your assets are sold and the money is used to pay your creditors. You are allowed to keep certain basic household and trade related items. You cannot act as a company director while a bankrupt. If the state believes you are a culpable bankrupt further restrictions can be imposed.
Can I have a bank account when I am bankrupt?
There is nothing in the Insolvency Legislation which prevents a bankrupt from holding an account, but you should tell the bank or building society that you are bankrupt, since they may wish to impose conditions and limitations eg not allow a cheque guarantee card. You should not obtain overdraft facilities without telling the bank that you are bankrupt.
Can a bankrupt still trade?
If you are bankrupt you are still allowed to earn a living, and can do this by being self employed, as long as you do not obtain credit of £250 or more without disclosing that you are an discharged bankrupt or use another name unless you tell those with whom you trade of the name under which you were adjudged bankrupt. A bankrupt can also be employed by a company or business.
Do I have to pay my earnings to the Trustee in Bankruptcy?
If you earn more than sufficient to meet the reasonable domestic needs for yourself and your family, the Official Receiver or your Trustee in Bankruptcy may apply for an Income Payments Order (IPO).
When will I be discharged from my bankruptcy?
The automatic discharge date is one year. This can and will be extended if a bankrupt fails to cooperate with the trustee.
How do I obtain a Certificate of Discharge?
You should write to the Court where you were adjudged bankrupt quoting your most recent case reference. The Court fee for a Certificate of Discharge is £50.
What is an Individual Voluntary Arrangement?
An Individual Voluntary Arrangement (commonly abbreviated to IVA) is an alternative to bankruptcy. This is a contract between you and your Creditors. Often the terms of your proposal to your Creditors may be flexible and offer at least as good a return to your Creditors as in bankruptcy.
What is a Liquidation?
A Liquidation is similar to a corporate bankruptcy. Effectively, someone is appointed as the Liquidator to sell all of the assets of the company and to distribute all of the proceeds amongst the company's creditors.
Will I receive the monies due to me when a Company goes into Liquidation?
Whether or not any payment is made to you will depend on a number of factors. The first factor is the level of assets within the company. The second is your ranking as a creditor. Certain creditors are given greater priority. For example, those creditors who hold security such as a mortgage or charge will have higher priority than those who do not have such protection.
What is a Receivership?
A Receivership comes in many forms. In brief, however, it is a private right exercised by the holder of security over assets which were subject to a charge or mortgage to secure a debt. The holder of such security can appoint its own nominated individuals to organise the sale of the assets and primarily repayment to the holder of the mortgage or charge. Any residual monies are passed to unsecured creditors via a liquidator.
What is an Administration?
An Administration is whereby a company or partnership seeks from the Court the appointment of an individual to act in the interest of all creditors of the company with a view to achieving either a rescue of the company or a better return to creditors than would occur had the company simply been placed into liquidation.
What is a Corporate Voluntary Arrangement?
A Corporate Voluntary Arrangement is very similar to an IVA. See the reference above.
What happens if a company of which I am a director goes into liquidation or other form of insolvency?
You have a statutory duty to co-operation with the insolvency office holder who will ultimately be responsible for writing a report on your conduct as a director to the DTI. If this is adverse you can be disqualified from acting as a director.