Fighting Debt - a user guide

11) BANKRUPTCY

a) What is Bankruptcy

Bankruptcy is a court order that you can apply for if you're in debt. It is is one of many option of dealing with debts that you cannot afford to pay. The proceedings free you from large debts so you can make a fresh start subject to restrictions. Your assets are shared equally amongst all of your creditors. There are no restrictions on who can apply for bankruptcy.

Bankruptcy should never be taken as an easy option. The process can be lengthy and complicated if you do not have proper guidance. Also, there are other alternative to be considered and it is advisable to contact one of the following ASAP before any firm decisions are made. Citizen's Advice Bureau, a Solicitor, a Qualified Accountant, an Authorised Insolvency Practitioner, a reputable Financial Adviser or a Debt Advice Centre.

If you proceed with bankruptcy you will have to give up possessions of value and your interest in your home. If you run your own business then this is likely to be closed down. Some companies, particularly the financial and charity sector will not employ someone who has been made bankrupt.

A creditor that you owe money to can apply to make you bankrupt via a Statutory Demand. For many people the first time they come across potential bankruptcy is when a STATUTORY DEMAND is received (see example). As soon as you receive a Statutory demand you must act as there is a strict timeline to follow. Do not immediately panic on receiving a Statutory Demand but do act ASAP. There is qualified help and guidance available to you from many sources (listed below) on dealing with a Statutory demand.

Do check that the letter you have received is a Statutory Demand, and not a debt letter threatening of such. This can be checked at http://www.insolvency.gov.uk.