If you are an individual, including a member of a partnership, Bankruptcy is one way of dealing with debts you cannot pay.
There are different insolvency procedures for dealing with companies and for partnerships themselves.
Bankruptcy frees you from your overwhelming debts so you can make a fresh start, subject to some restrictions such as being unable to obtain credit over £500 without disclosing that you are an undischarged bankrupt, acting as a director of a limited company and some professionals such as accountants and lawyers may find that their profession is at risk.
In freeing you from your debts, your assets such as solely or jointly owned property, vehicles, savings and shares to name but a few are realised and the proceeds shared out fairly among your creditors.
In addition, your income and expenditure will be reviewed and any surplus after the essential costs of living may be taken into account and subject to an Income Payments Agreement or Income Payments Order. This means your surplus income, or a percentage of it, will be paid into the bankruptcy for a period of 36 months.
An investigation into your affairs for the period prior to bankruptcy will also be undertaken and may result in a Bankruptcy Restriction Order (BRO) being made against you if certain offences have been committed prior to or during the Bankruptcy.
There is an alternative to Bankruptcy, which is known as an Individual Voluntary Arrangement or IVA for short.
An IVA can help you keep control of and protect assets that are ultimately at risk in Bankruptcy; further there are no investigations into your affairs and no prospect of a BRO.
For further information on the alternative to Bankruptcy click here, or alternatively contact us for free, no obligation impartial advice.