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Bankruptcy

Before we would recommend bankruptcy, we will analyse your client’s financial affairs and discuss any possible alternative courses of action with your client to resolve their financial problems. A creditor can make your client bankrupt if they owe £750 or more and have not been able to negotiate an agreement on how to pay that debt. If their IVA fails, your client can also be made bankrupt. Normally your client will be discharged from their debts after one year.

Advantages of bankruptcy:

• Creditors will no longer be able to pursue your clients.
• All of their debt will be written off providing your clients with a fresh start, they will not have to make further payments to their creditors.
• Any personal or occupational pensions they have should be unaffected.
  

There are also disadvantages:

• If they own any valuable assets, including endowment policies, these will usually have to be sold.
• It restricts your clients’ ability to obtain credit in the future without permission from the lender and your clients’ credit rating can be affected for many years after the annulment.
• An income payment order may be made in response of any surplus income. This will normally last for 3 years.
• They are not allowed to start up or be involved in the day-to-day management of a limited company.
• Your clients are not allowed to act as a Member of Parliament, and there are certain other restrictions, such as acting as a member of any local council or school boards, etc.
• Your clients may not practice as a chartered accountant/lawyer or act as a Justice of the Peace.
• There may be a clause in any hire purchase agreement to terminate the agreements in the event of bankruptcy.