Bankruptcy
Chamberlain & Co’s specialist has 37 years experience in assisting individuals and their spouses who may be affected by an existing or threatened Bankruptcy Order with concerns regarding retaining their family home and regarding legal means by which a Bankruptcy Order may be appealed or annulled, or by which creditors’ agreement to an alternative process to settle all outstanding debts can be secured.
How do bankruptcies work?
In the event of a Bankruptcy Order an individual loses legal ownership and control of their assets. The individual is also likely to face difficulty in obtaining credit and is not permitted to take part in the management of any limited company. Future surplus income may be claimed for the benefit of creditors.
The Bankruptcy Process
Consultation
Review Options
Confirmation
Testimonial
When our client was made bankrupt by HMRC due to arrears of tax stretching back 9 years Chamberlain & Co liaised with his accountant and HMRC to clarify disputed debts, worked with a third party willing to provide funds to settle the client’s debts, and with the Official Receiver and the court to ensure the payment of all debts and the costs of the bankruptcy and a successful application for annulment of the Bankruptcy Order.
Contact Us
Contact Chamberlain & Co whether you are either threatened by bankruptcy or already subject to a Bankruptcy Order. Their staff have many years of experience in guiding clients through the complexities of bankruptcy law and procedure and the effects of bankruptcy on their homes and families and the operation of their businesses.
Prompt action can lead to the avoidance of bankruptcy or the annulment of an existing Bankruptcy Order. If you require help give us a call on 0113 242 0808 or e-mail advice@chamberlain-co.co.uk.
What are the advantages and disadvantages of bankruptcy?
Advantages
If an individual becomes subject to a Bankruptcy Order their creditors can thereafter no longer proceed with legal action against that person and must lodge a claim in the bankruptcy estate. With the help of specialist advice a third party could secure an agreement with the trustee of the bankruptcy estate to buy out the bankrupt’s interest in the family home removing the threat of any possession action.
Disadvantages
In bankruptcy an individual has no legal capacity to deal with their assets as legal title to the assets will vest in the trustee of the bankruptcy estate. While an undischarged bankrupt an individual cannot act as the director of, or take any other role in the management of, a limited company. A Bankruptcy Order will have an adverse effect on an individual’s credit record for at least 6 years
Bankruptcy FAQ's
What is bankruptcy?
“Bankruptcy is a formal insolvency procedure used to help deal with the affairs of individuals where their liabilities exceed their assets or they are unable to pay their debts as they fall due. The declaration of bankruptcy (“bankruptcy order”) is made either by the courts following a petition by a creditor (owed at least £5,000 including court sanctioned legal costs) or following an application online by the individual concerned to the Office of the Adjudicator.
A ‘lighter’ form of bankruptcy called a ‘Debt Relief Order’ is available to insolvent individuals who have less than £15,000 of debt, negligible surplus income and who do not own their own home.”
Can I challenge a Bankruptcy Order?
Yes, if you believe that the debt in respect of which you have been made bankrupt is not valid, or if you believe that the creditor who issued the petition for bankruptcy has not taken the correct steps to serve you with those proceedings, it may be possible to appeal against the Bankruptcy Order and/or apply for the annulment of the Bankruptcy Order on the grounds of “ought not to have been made”. It is also possible to apply for annulment of a Bankruptcy Order on the grounds of the payment in full of all debts, costs and expenses.
What is the position if assets are sold or some debts are paid after a creditor has presented a petition for a Bankruptcy Order?
A court may declare this transaction invalid unless it occured in good faith, for proper consideration and without the recipient having notice of the presentation of the bankruptcy petition, or unless the transaction is subsequently ratified by the court.
Can I propose an individual voluntary arrangement (“IVA”) in place of bankruptcy proceedings after a Bankruptcy Order has been made?
Yes, an individual can make this proposal even after a Bankruptcy Order has been made, but will not always secure the agreement of the Official Receiver or alternative trustee of the bankruptcy estate to pause the work of dealing with the assets in the bankruptcy estate while this proposal is put to creditors. However, where an IVA might offer the prospect of either additional third party contributions, advantageous realisations from assets and/or significant reductions in costs leading to a greater return to creditors, the required majority of creditors may still be prepared to agree that matters should be dealt with by way of an IVA instead of by means of the bankruptcy proceedings.
Would an inheritance received after the date of a Bankruptcy Order be deemed to be part of the bankruptcy estate?
Potentially, if the inheritance arises from a death which took place after the date of a Bankruptcy Order but before the bankrupt individual receives a discharge from bankruptcy ( discharge can be received automatically on the first anniversary of the Bankruptcy Order, but may be delayed as a result of an application for suspension of discharge by the trustee of the bankruptcy estate ). If the inheritance arises as a result of a death which occurs after the beneficiary has received a discharge from bankruptcy, the inheritance would not form part of the bankruptcy estate.
What is Stay or Annulment of Bankruptcy Proceedings?
Whether an individual is either in receipt of a creditor’s petition for a Bankruptcy Order ( or a threat of such a petition ) or indeed has actually become subject to a Bankruptcy Order, it is possible to advise and provide representation for that individual with a view to securing from the court an adjournment of the hearing of the bankruptcy petition or a formal stay of the bankruptcy proceedings in order that an alternative solution can be put to the petitioning creditor or the general body of creditors as a whole.
This can include a proposal to creditors that an individual’s indebtedness is dealt with by an individual voluntary arrangement (“IVA”), i.e pledging the individual’s existing assets and potentially their future income and/or a payment from a third party, in full and final settlement of known liabilities.
If a proposal for an IVA is approved by the appropriate majority of creditors, the individual is entitled to apply to the court for the annulment of any Bankruptcy Order previously made.
Assistance can also be provided to an individual subject to a Bankruptcy Order to allow that individual to apply to the court for the annulment of the Bankruptcy Order either on the grounds that the Order “ought not to have been made”, i.e that the petition debt was not valid or there was some defect in the petition process, or the grounds of the payment in full of all known debts together with the costs and expenses of the bankruptcy proceedings. Access to potential funding to support an application for annulment on the grounds of payment in full can also be provided.
Annulment of the Bankruptcy Order returns the status of the individual ( and their credit record ) to what it would have been had the bankruptcy proceedings never taken place.
