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In London, and the United Kingdom more broadly, bankruptcy is a legal status for individuals unable to repay their debts. The nature of bankruptcy procedures are set out under the Insolvency Act 1986 and it applies to individuals and partnerships.
The law provides two paths to bankruptcy- voluntary (where the individual or business directors declare themselves bankrupt) and involuntary (where creditors owed more than £5,000 can apply to court to declare the individual or business bankrupt). Once declared bankrupt, control of the debtor's asset shifts to the appointed trustee to pay off the debts, while different types of debt may either be written off or still need to be repaid.
Navigating bankruptcy can be complex and confusing. A lawyer can guide you through the process, help you understand what to expect, and advise you on the best course of action. Situations you may require a lawyer include:
1. You're considering filing for bankruptcy and want to understand the potential consequences.
2. You want to protect your assets from creditors.
3. You've been declared bankrupt involuntarily and need assistance to challenge it.
4. You need help understanding which debts will be written off.
The key aspects of local laws relevant to bankruptcy in the UK include:
1. The Insolvency Act 1986: This is the main legislation governing Insolvency, both individual and corporate, and contains laws related to bankruptcy.
2. The Enterprise Act 2002: Introduced changes to insolvency law, including reducing the length of discharge from bankruptcy from three years to one year or less in certain circumstances.
3. The Insolvency Rules 2016: Provides the procedural rules to be followed in insolvency processes.
Understanding these laws and how they're applied can greatly inform and influence the procedures and outcomes of bankruptcy.
Bankruptcy typically lasts for 12 months from the date of the bankruptcy order. After this period, you're usually discharged and the majority of your debts will be written off.
Essential items, such as clothing and household goods, are typically excluded from what can be taken and sold by the trustee. Some assets, including your home or vehicle, may be at risk depending on their value and other factors.
You're not allowed to act as a director of a company or create, manage or promote a company without the court’s permission while you're bankrupt.
Yes, bankruptcy will have a serious impact on your credit rating. It can remain on your credit file for up to six years after the bankruptcy order.
Most types of debt can be included, but others like court fines, student loans, and child maintenance payments, are excluded from bankruptcy and you'll still be liable to pay these.
You may find it helpful to refer to the official resources provided by the UK government (Insolvency Service) for a comprehensive understanding of bankruptcy laws and procedures. You may also join related forums, and seek free advice from financial charities such as StepChange and Citizens Advice Bureau.
If you are considering bankruptcy, consult a financial advisor or insolvency practitioner. If you’ve decided to proceed with bankruptcy, hiring a reputable lawyer can be your next step. They can help you understand the process, assist with completing forms and appear in court if necessary.
