The bankruptcy process is commenced by either a creditor’s petition or by debtor’s petition. In a creditor’s petition, the creditor, or group of creditors, must be owed £750 or more and must be able to show that the debtor is unable to pay the debt, or has little prospect of being able to pay it. In a debtor’s petition, the debtor makes a petition to the court alleging that they cannot pay their debts.
If the court decides to make a bankruptcy order it will last for one year, though a bankrupt can be discharged in less time in certain circumstances. When the order for bankruptcy is made, the next stage in the bankruptcy process is for the official receiver to take possession of all of the bankrupt’s property. The official receiver may continue to supervise the sale and distribution of the bankrupt’s assets if they then assume the role of trustee in bankruptcy.
The bankruptcy process continues with the debtor submitting a statement of affairs, which includes details of all their creditors and assets, within 21 days of the bankruptcy order. The official receiver will then decide whether it is appropriate to call a meeting of creditors, who may then appoint a trustee in bankruptcy of their choice. If the creditors do not appoint their own trustee in bankruptcy, or the official receiver decides that a meeting of creditors is not necessary, then the official receiver will become the trustee in bankruptcy. The role of trustee in bankruptcy is to realise the assets of the bankrupt and distribute them amongst creditors in accordance with the statutory order of distribution.
If you would like to obtain legal advice on the bankruptcy process, Caven can put you in touch with a local specialist insolvency solicitor free of charge. So, if you have any questions or would like our help in finding local insolvency solicitors please call us on 0800 1777 167 or complete the web-form above.