Bankruptcy
A person may petition for their own bankruptcy or a person owed money may petition for it. This is a court process and once declared bankrupt the assets of the bankrupt (subject to some exceptions such as tools of the trade, some pension funds, etc.) vest in the Official Receiver. The Official Receiver may seek to have an Insolvency Practitioner appointed to sell the assets and distribute funds to creditors or may perform this task themselves.
Once declared bankrupt the person would normally have to attend an interview with the Official Receiver and complete a questionnaire. The Official Receiver would investigate the person's affairs and consider whether they have done any acts that could be challenged or are criminal in nature.
Provided the bankrupt has not been bankrupt previously and has not committed any offence they would be usually discharged from bankruptcy within 12 months. Any assets at the date of the bankruptcy (and some acquired afterwards) would remain vested in the Trustee.
If the bankrupt has spare income each month then the Official Receiver or Trustee may seek an Income Payments Order. This involves the payment of a percentage of this surplus to the Official Receiver or Trustee for a period of 3 years.
If the bankrupt has a property with equity in it the Trustee would have to realise this for the benefit of the creditors. The bankrupt's spouse or children may have the right to remain in the property for a period of 12 months after which it is deemed that the creditors rights to the asset outweigh other person's rights. It may be possible to avoid the sale of the property if a spouse or third party is willing to pay for the bankrupt's share.
Guide to bankruptcy
