How does Bankruptcy work?
• You will have to make a petition to your local County Court or the High Court in London. • In the petition you have to detail your income, outgoings, debts and assets. Your petition must be completely truthful and accurate. • Your petition will be examined and the court will decide whether to make a Bankruptcy Order. • You will be interviewed by the Official Receiver. The Official Receiver is a civil servant who will deal with the creditors and decide what to do with assets such as vehicles and property. • In Bankruptcy your assets are usually sold. Your creditors are then paid with the proceeds of the sale. If the creditors are not paid in full then any shortfall is written off. • You will be subject to certain restrictions during and after the Bankruptcy proceedings.
Bankruptcy laws serve two main purposes. First, bankruptcy law gives creditors some payment on their debts if a debtor (the one who owes the debt) can afford to pay them. Second, bankruptcy law gives debtors a fresh start, by canceling many of their debts, through an order of the court called a discharge.
