The Department of Trade and Industry released figures for the third quarter of 2003 which showed that there was almost a 17% increase with the same three month period in 2002. Over 60% of bankrupts where private individuals.
There has been a marked increase in the number of young people being declared bankrupt as they struggle to pay off large debts accrued during their student days. It may seem the answer to the stress of unpaid debts and creditors snapping at your heels. Becoming a bankrupt, however, brings with it it's own set of problems.
The answer may be to avoid bankruptcy by entering into a voluntary arrangements with lenders. This could result in your paying a percentage of the original debt ie 50 pence for each pound owned. If you cannot get creditors to agree to an arrangement, then bankruptcy will be the only option. You can apply to the court yourself for a bankruptcy order or any creditor (or group of creditors) owed more than £1,000 can apply.
Currently a Bankruptcy Order (BO) usually lasts for three years, but can be lifted after 2 years if the debt is below £20,000. However it can go on for longer if an individual has previously been made bankrupt. If bankruptcy is the end result to your being unable to pay personal debts then the procedure is as follows;
- A bankruptcy petition is presented either by yourself or a creditor owed at least £750 to the court - a bankruptcy order is then produced.
- If you wish to dispute the creditors claim you should do so before the proceedings have begun as it is much harder to do so once things are underway.
- The petition will usually be presented at the High Court in London or at a local county court near to where you live or trade.
- An official Receiver must report any matters which indicate that you may have committed criminal offences in connection with your bankruptcy or that your behaviour has been dishonest or you have been in some way to blame for your bankruptcy. He or she will give notice of the bankruptcy order to local authorities, utility suppliers, courts, sheriffs, bailiffs, National Savings and Investments (premium bonds), the Land Registry and any relevant professional bodies. Enquiries will also be made of banks; building societies; mortgage, pension and insurance companies; solicitors, landlords and any other persons or organisations who may be able to provide details of any assets or liabilities that you have, or have had, an interest in (either on your own or jointly with others). Third parties will also be asked about any other matters relating to your bankruptcy.
- An insolvency practitioner can be appointed instead of the Oficial Receiver who will then be responsible for disposing of your assets and making payments to your creditors.
- At this stage you will be what is refered to as an Undischarged Bankrupt and at this stage all monies owed to you will be paid to the receiver who will then use it to pay off your debts. You will receive an allowance to live on. Undischarged bankrupts cannot be a director of a company and even after discharge bankrupts cannot hold some elected positions.
- At the end of the bankruptcy proceedings you will be Discharged by the court. At this point you are once again in charge of your own finances.
Except in cases where the court thinks that you have been to blame for your bankruptcy, you should be discharged from bankruptcy within one year under the rules of the Enterprise Act 2002 . If the court decides you were to blame for the insolvency of your company, you can be disqualified from being a director for up to 15 years.
|
