Personal bankruptcy: The basics

Personal bankruptcy is a formal mechanism within English Law which allows the assets and liabilities of an insolvent individual to be dealt with. A trustee will be appointed to administer the bankruptcy estate and will realise the assets that are comprised in the estate and identify and pay the creditors.

The trustee in bankruptcy will also have the ability to use the authority of the court to obtain information from the bankrupt and any other relevant parties with a view to discovering assets and pursue any claim against the bankrupt or their associates or former business associates which may unearth monies for the benefit of creditors.

How long does it last?

Once a bankruptcy order is made against an individual, their legal status will be either that of an undischarged bankrupt or a discharged bankrupt.

Under current legislation, unless the Official Receiver or an appointed Trustee objects to this automatic process then an individual will be discharged from Bankruptcy, i.e. from the legal restrictions that follow Bankruptcy, on the first anniversary of the bankruptcy order. In some cases if the Official Receiver is of the view that the bankrupt’s affairs are very simple and there are no investigations needed, they may apply for discharge after 6 months.

In the event that a bankrupt individual fails to co-operate with the Official Receiver or Trustee, it is open to the Official Receiver or trustee to apply for a suspension of the discharge indefinitely until the outstanding information is produced or actions completed.

This is a court application and the individual would receive service of those papers, hence it is quite often very much within the control of the bankrupt themselves how long the bankruptcy process lasts because it is related to the extent to which they co-operate with the process.

However the administration of a Bankruptcy estate doesn’t always and, quite often, will not be concluded at the same time as discharge. The issue of discharge will be dealt with in 6 to 12 months, but the bankruptcy will not be fully concluded until the trustee of the estate has identified and realised all the assets comprised in the estate and paid the creditors. It is therefore quite likely that the Bankruptcy will exceed 12 months dependent upon what work is required and indeed can go on for a number of years.

For more information on Bankruptcy, contact Colin Saville on 0113-242-0808.