BankruptcyThis is always a last resort if you are in serious debt and no other debt solutions such as an IVA or debt management plan will help. It protects you from your creditors and allows you to start afresh but you need to think about it carefully first A Statutory Demand is a formal document which can be issued to a debtor who has loan repayment arrears. This is the first step of the legal process a creditor may use to obtain a court order to get you to repay your debt. If you do not repay your debts on time, your creditor may use the power of the courts to get you to settle the debt or start making reasonable payments. A creditor has the option to try to bankrupt you, with a statutory demand being the first step of that process. A Statutory Demand requires you to settle the outstanding debt by either:-
Secure it against a property or other assets. Within 18 days of receiving a Statuary Demand, you may apply to your local County Court to set it aside under the following circumstances:
Ignoring or Failing to comply with a Statutory Demand entitles the creditor to present a petition for bankruptcy 21 days from the date of issue. Some companies use statutory demands as a scare tactic. They know that when someone is unable to repay a debt, they generally have more than one debt, and that whoever shouts loudest tends to get paid first. However, you should always take a Statutory Demand seriously. If you have received a Statutory Demand, or have been threatened with one, then please call us for advice. You will have more options to repay your creditors than stated in terms of the demand. Types of Statutory DemandThere are 3 types:-
A Statutory Demand can only made for an unsecured debt. If the creditor holds some security on the debt, than that value must be stated so the unsecured portion of the debt is known. For debts due in the future, the creditor must give reasons as to why it is considered that you have no realistic chance of making payments when they fall due. The demand is normally issued to you in person by the creditor. It may be posted provided there is proof that you are aware of the demand. If you are not contactable, them the demand can be issue by advertisement, however the creditor requires a court order to allow this. Failure to comply with a statutory demand is seen as proof you are not able to repay the debt, and as such, the creditor is entitled to serve a bankruptcy petition to the court. What to Do NextIf you have received a Statutory Demand, or have been threatened with one, then please Call Us for FREE advice. 0800 4 96 95 94 We can offer a solution that will be affordable to you and acceptable to your creditors. Bankruptcy PetitionHow does someone become bankrupt? Under UK Bankruptcy law, there are 3 ways. The 3 routes to Bankruptcy.
Debtor's Petition.Debtor Bankruptcy Petition form (6.27) Statement of Affairs form (6.28) Statement of Affairs GuidancePetitioning one's own bankruptcy requires the debtor to complete a bankruptcy petition form (called form 6.27) and a statement of affairs form (called form 6.28). Advice on Completing Statement of Affairs form.The Statement of Affairs form requires detailed information; including valuation of assets which may not be know without seeking professional help. Information here is in addition the Official Statement of Affairs Guidance Leaflet as provided by the Insolvency Service. Q1.14 does not required details of informal negotiation attempts with creditors. Q1.15 requires details of impeding court action, including magistrate courts. Section is only relevant to those self employed at some point in the past 2 years. Section 3 is about value of assets. Approximate values only should be given, based on sale at auction, not what they we cost to replace from new. Section 5 asks for details of past and present bank accounts. Any money in these accounts should be withdrawn prior to the bankruptcy application. These accounts will be frozen and provisions need to be made to allow for payment essential living expenses. Section 6 is about employment and income. Include only regular income and that of other household members as this impacts how much is needed to maintain basic domestic needs. Include all state benefits entering the household, even though the claimant is not the person petitioning for bankruptcy. Section 7 includes a standard list of household and personal outgoings. Details of all outgoings should be detailed in addition to the standard list. Section 8 concerns property. Those applying for bankruptcy should be aware that in the case of owner-occupation, where the property is solely in spouse's name, then the applicant may have a claim on part of the property, therefore this will be considered as an asset in the bankruptcy. Specific professional advice should be sort on this matter. Section 9 concerns property sold in the past 5 years. If it is considered that the asset was disposed of a less than its true value, the Trustee has the option to reverse the transaction. Section 10 covers details of dependant children, spouse/partner and other household members. This is to be taken into account by the Trustee when deciding value of income payment orders (payments from income the bankrupt is required to pay until discharge from bankruptcy. Section 11 covers reasons for bankruptcy. Details of when difficulties when first experience and the root cause the problems are required. Extreme care must to take in completing this section as instrumentation of the facts may leads to a Bankruptcy Restriction Order. Application for court fee exception (ex160)For residents of England and Wales, both forms are to be completed and presented to the most local court with bankruptcy jurisdiction. For those not living or domiciled in England or Wales, the forms are to be presented to the High Court in London. Court fees of £150 and a deposit of £325 must be paid by the debtor at this point. Court fees can be waived when the debtor is on benefits and total income does not exceed £15,050 per year. Also, the fee can be waived if undue financial hardship can be proven. Fee wavier is by application via form ex160. Depending on local practices a hearing may be immediate, later same day or by appointment at a later date. The Court may refer the case to an Insolvency Practitioner in the case where the possibility of an IVA being is more appropriate course of action needs consideration. Creditor's Petition.For a bankruptcy petition to be presented to the court, 3 conditions must be satisfied. The debtor must be domiciled or resident in England/Wales or be active in business in England or Wales, on the date of the petition, or at any time in the previous 3 years. The debt must be at least £750 to the creditor petitioning for bankruptcy. The debtor must have not realistic ability to repay the debt, or refusing to pay the debt. This is proven by the debt being served with a statutory demand, which has not been set aside or complied to. The 4 types of Creditor Petition. Failure to comply with a statutory demand, debts payment currently due/overdue. Failure to comply with a statutory demand, debts payment due in the future. A court order execution returns unsatisfied. (Eg bailiffs were not able to seize items of value) Default in connection with an IVA.2 or more creditors may jointly petition. Secured creditors may petition for the part of the debt this is not secured, or risk forfeiting their security. The creditor's petition must state: The amount owed, and if interest is owed how it has been calculated and the justification for this. That the debt is for a liquidated sum payable now or at a specified future date and that the debtors has no realistic chance of making payment on time. That the debt is unsecured. If the petition is based upon a Statutory demand, then only that debt, plus interest accrued since the date of the demand was issued can be included. If the petition is based upon an unsatisfied execution of a previous court order, then full details must be given including the value of any sum raised by the Court's sheriffs or Bailiffs. It is not enough the bailiffs visited the property and were unable to gain access; they would have to have been refused access. IVA Supervisors' Petition.If you are currently within an IVA, your supervisor may petition the for your bankruptcy on the grounds that: You supplied false of misleading information on which the arrangement is based. You have failed to maintain the terms to the arrangement. In this case, the IVA Supervisors can become the Trustee in the bankruptcy. Issue of the Bankruptcy PetitionA Bankruptcy Petition must be served in person. A Bankruptcy order may still be prevented but you must give at least 7 days notice of your intention to oppose it. You may not use any reason for which a ruling has already been made against, unless there has been a change in circumstances. What to Do NextIf you are consider petitioning for you own bankruptcy, the you must also consider whether a IVA is a better alternative for your circumstances. This is especially the case if you own your home or have other high value assets to want to keep. CALL US or submit the INSTANT ADVICE form for Immediate Free Advice. 0800 4 96 95 94 Bankruptcy HearingAt a Bankruptcy Hearing, a district judge considers the bankruptcy petition to decide whether or not to make a bankruptcy order. Once a bankruptcy order is made, you are then officially bankrupt. You (the debtor) and the Official Receiver attend the Bankruptcy Hearing. Creditors or their representatives can attend if they wish. In order for the judge/court to make a bankruptcy order, it must be satisfied that the debt is proven and that either:- The debtor can't repay the debt. OR In the case when payment is not yet due, that the debtor has not realistic change of being able to repay the debt when it is due. When the petition is served by a creditor, they must prove that a corresponding Statutory Demand has been brought to your (the debtor's) attention. If you have already repaid the debt in full, then the case will be dismissed, but you may still have to pay the creditors costs. If more than £750, then pursuit of these costs could result in fresh bankruptcy proceedings. Reasons why a Bankruptcy order may not be made.In the court's opinion, the creditor has refused to accept reasonable payment by instalment or a reasonable reduced full and final payment to settle the debt. You have reduced the debt to under £750 in between date of petition and date of hearing. An agreement is reached at the hearing for the repayment of the debt. When the bankruptcy order is made, here are normally 3 elements. A bankruptcy period of 12 to 36 months. | |