Financial Blog :: Accounting & Tax Services

Bankruptcy is the inability or impairment of an individual to pay their creditors. It is a legal status that sadly affects many people throughout the UK every year. Bankruptcy can be filed in two ways. Either your creditor will file a bankruptcy petition against you in an effort to recoup a portion of what they are owed, which is known as involuntary or more commonly you will file for bankruptcy yourself, which is known as voluntary. When you file for bankruptcy you will need to fill in a petition containing your financial information.

If you are filing your own bankruptcy you need to obtain a form from your local county court that will cost you £150 plus a £310 deposit. If your creditor if filing bankruptcy against you, which they can do if you owe more than £750, it is important that you co-operate fully even if you dispute the bankruptcy claim. you write to your creditors and try to agree a repayment timetable * Individual voluntary arrangements (IVA) – an insolvency practitioner helps you negotiate repayment terms * Administration orders – a county court orders you to make payments to the court, which the court then distributes amongst your creditors. Whilst you are legally classed as being bankrupt you still need to meet commitments such as rent or any debts that are incurred after your bankruptcy.