Bankruptcy
Bankruptcy is an insolvency process which is started by a bankruptcy petition. This can either be brought by you as someone who owes the money, or by someone you owe money to.

If you owe someone more than £750, after they have provided you with time to pay and taken certain types of legal action they may present a bankruptcy petition. You will have an opportunity to avoid bankruptcy (by showing that you have paid the debt and legal costs, or that the debt is not due), but if you really do owe the money you will be made bankrupt by the Court.

If you know that you owe someone money, and are unable to pay, you may decide that it makes more sense to petition for your own bankruptcy. Whilst this sounds an odd thing to do, it will mean that the process will start sooner and therefore end sooner. Experience has shown that this also removes some of the stress associated with the beginning of bankruptcy, and may therefore be a slightly easier option if either you or your partner is of a nervous disposition.

No matter how you got into bankruptcy, the procedure of the bankruptcy itself is always the same. If this is your first bankruptcy, you will be bankrupt for 1 year (unless you have contributed to your financial position), though the administration of the estate will continue until everything is dealt with. If this is not your first bankruptcy, the minimum period will be 5 years rather than 1.

Your affairs will first be dealt with by the Official Receiver, who works for the Insolvency Service, part of the Department of Trade and Industry. Your case may stay with that department, or may be transferred to a Trustee in Bankruptcy such as Marc Landsman of Carmichael & Co. Either way, almost all of your assets will be sold and the money used to pay the costs of the bankruptcy and your creditors. The main exceptions to assets which are sold are things you need for your work and personal effects such as clothing and furniture (unless it is particularly expensive).

If you own your home, any share of the equity in it will come into your bankruptcy. Since it is not possible to sell half a home, it will normally be offered to your partner if you have one. Otherwise, you may be able to buy it when you receive your discharge from bankruptcy.

Carmichael & Co is able to help you present your own bankruptcy petition, or advise you if you have already been made bankrupt. Marc Landsman also often acts as Trustee in Bankruptcy and therefore knows the position from both sides of the fence. Because Carmichael & Co acts for both bankrupts and creditors, we are used to all aspects of the problems which can arise, and can deal quickly and efficiently with them.