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Changes to Debtor Bankruptcy Petitions

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Did you know that major changes are being made to the way in which people can declare themselves bankrupt and these come into force on 6th April ?

Bankruptcy is an insolvency process which applies just to individuals and is something which you can apply for yourself. When applying for yourself this is generally referred to as a debtors petition, or if you owe money to someone else they can apply to have this done to you, these are creditor petitions.

You are said to be bankrupt if you cannot pay your debts as they fall due.  This is not the same as owing money to someone which it is agreed you will pay off over a long period of time such as finance on a car or a mortgage, it is intended to cover situations where you cannot keep up those regular payments and are getting into greater and greater debt by borrowing and spending more on credit cards or loans which you have no prospect of paying off.

At present only the courts have the power to make you bankrupt and a debtor (the person wishing to be made bankrupt) has to complete the necessary forms and present them to their local court who may deal with the request on paper or may require the debtor to appear before a judge.

After consultation with various parties it was felt that debtors found the process to be intimidating and that people who might actually be better off declaring themselves bankrupt were put off doing so because of the need to go to court.

From 6th April 2016 the only way in which a person can make themselves bankrupt will be to complete an online form and submit that electronically to an Adjudicator within The Insolvency Service which is the Civil Service office which currently deals with all insolvency matters. There will be no hearing but once an order has been made the consequences will be just the same as they are now with all of the same restrictions imposed on a bankrupt person that currently exists.

The online application is intended to be simpler and less ‘legalistic’ than the current paperwork and it can be accessed via the government website GOV.UK. Applicants will still have to pay a fee, though it will be lower than the court fee and can be paid in instalments, but there will be no ability to apply for fees to be waived as there is for court fees if you satisfy certain financial criteria. The Government have also released an interactive smart answer tool to help people with personal debt issues and to choose a debt solution which is right for them. This tool can be accessed here.

Making yourself bankrupt is a very serious business and not one to be undertaken without proper advice and consideration and certainly not to be approached like an on-line purchase of a new pair of shoes. The GOV.UK website will emphasise the need for everyone considering bankruptcy to seek advice before taking any action. It is important that the advice taken is not just of a general nature but specific to the needs of the particular individual.

If you would like to speak to one of our experienced insolvency specialist solicitors and arrange a free meeting, phone 0161 764 5266 today and speak to Fiona or email her on fiona.gaskell@clough-willis.co.uk