Dealing with Personal Bankruptcy

Personal Bankruptcy occurs when an individual can no longer manage their debts; however if you are in financial difficulty it is important that you don’t file for bankruptcy straight away. Personal bankruptcy is a serious matter and it is important that you look at alternative routes as soon as possible as you don’t have to become bankrupt just because you are in debt.

If after you have thoroughly looked at all of your options and possibilities you are left with bankruptcy as your only option then it is important that you know the basics about what is involved in the proceedings. One thing that should be mentioned is there are different ways in which the personal bankruptcy proceedings can be initiated. A court will make a bankruptcy order after a bankruptcy petition has been presented. There are two ways in which this petition can be presented, either by yourself (debtors petition) or by one or more creditors who are owed at least £750 by you and that amount is unsecured (creditors petition).

It is important to remember that a bankruptcy order can still be made even if you refuse to acknowledge the proceedings or you refuse to agree to them. Due to this it is important that you co-operate fully once the proceedings have begun. If you dispute the creditors claim you should try and reach a settlement before the bankruptcy petition is due to be heard. Trying to do so after the bankruptcy order has been made is both difficult and expensive.

If personal bankruptcy proceedings are taken against you or you are thinking of making yourself bankrupt you should seek your own legal or financial advice from a Citizen Advice Bureau or solicitor or debt advice centre. It is important that you understand fully what you are getting yourself involved in and that you understand what is meant by a bankruptcy petition.

Bankruptcy can be broken down into two forms, practical insolvency, which is the inability of a person to pay their debts as they are due to do so and absolute insolvency, which is when a person has more liabilities (debts) than they do assets (cash, etc) and this situation is unlikely to change in the future.

Although it may not seem it at the time the aim of most creditors is to not make an individual bankrupt. Creditors usually speak of bankruptcy as a way of scaring you into repaying your debts. Creditors don’t want you to become bankrupt as they will never regain the majority of their debts.

Personal Bankruptcy is a way of allowing an individual to make a fresh start and relieving them from debts that they can’t physically pay back; however there are restrictions placed on the individual once they have been declared bankrupt.

When you are declared bankrupt you will have to give up any possessions of value and your interest in your home. As well as this part of your wages that you earn after being declared bankrupt will be turned over to your creditors. All of these aspects will be used to repay the debts that you owe; however there are certain things that aren’t included in the bankruptcy proceedings. You are allowed to keep furniture that you need for domestic use as well as any vehicles that enable you to get to work.

If you are currently going through a personal bankruptcy procedure or you are about to enter into the proceedings then it is important that you have as much information as possible to help you through all of the stages involved.

Helen is the web master of Edge of Bankruptcy, specialists of all your Personal Bankruptcy needs.

Dealing with Personal Bankruptcy / Author: Helen

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