As a business, if you cannot pay your debts, then you will be considered insolvent, which may lead to liquidation or winding up of your business.
In business, bankruptcy applies to sole traders and individuals who have given personal guarantees for who can no longer pay the debt or loan.
Individuals may also face bankruptcy if a personal debt is more than £750 and the person they owe decides to demand payment through court proceedings. Individuals may wish to file for their own bankruptcy petition if the alternatives to bankruptcy are not deemed appropriate, such as: -
- Informal Agreements
- Individual Voluntary Arrangements
- Administration Orders
Bankruptcy is only considered as a last resort and all other solutions will be reviewed before bankruptcy is advised.
Bankruptcy has some advantages: -
- Your creditors will no longer be able to pursue you or take action against you to recover what you owe
- You will not have to make further payments to your creditors, but will have to pay any surplus income over to your Trustee
- All of your debt will be written off providing you with a fresh start
- Income from benefits or pensions will be yours to keep
You can expect to be discharged after one year and will then be free of debt
There are also disadvantages: -
- If you own any valuable assets, including endowment policies, these will usually have to be sold
- It restricts your ability to obtain credit in the future without permission from the lender and your credit rating can be affected for many years after the annulment
- You are not allowed to start up or be involved in the day-to-day management of a limited company
- You 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
- There will usually be a fee to pay with your application
- Your bankruptcy will be advertised in a local newspaper
We offer expertise in relation to both corporate and personal insolvency, helping you explore the best way of dealing with Insolvency or pending Insolvency.