Bankruptcy or the threat of bankruptcy is a worrying time for most people. Will I lose my home? Will my debts be wiped out? How long will it last? Will it affect my family? Can the bankruptcy be cancelled or ended early? What are my obligations and duties? These are all very valid questions.
Isadore Goldman are specialists with a very long pedigree of providing personal insolvency advice. If you are a bankrupt, or about to be made bankrupt, and need advice on the duties and restrictions relating to bankruptcy, alternatives to bankruptcy, advice to your partner or whether you can cancel your bankruptcy (an annulment application), speak to us as soon as possible.
Bankruptcy is a process that is intended to achieve two purposes. On the one hand it can provide a fresh start for the honest but unfortunate debtor; on the other hand, it is designed to treat all creditors (the people owed money) equally. To help with this process, when a person is made bankrupt he or she will have to hand over all their non-essential assets to a individual who is appointed to manage the bankruptcy. This person is called the trustee in bankruptcy (the Trustee) and, typically, if a bankrupt co-operates with their trustee they will be freed from bankruptcy after a year.
The typical parties within a bankruptcy scenario are the potential bankrupt, his or her partner, the creditors and the trustee. We act for all these parties including trustees. Our experience in acting on the other side of the fence, for example for creditors or trustees, means we have an intimate understanding of their concerns and strategies, so whether you a bankrupt or a bankrupt’s spouse or partner, we are ideally placed to fight your corner.
If you have recently been made bankrupt, you may be wondering what you can and cannot do, and how this may affect what you do on a day to day basis. You may also be unaware of what duties you owe to your Trustee in Bankruptcy (the Trustee). It is important to secure advice at an early stage so as to avoid some of the harsh consequences that can follow from non-cooperation.
Subject to your full cooperation with your Trustee, you will usually receive your discharge from bankruptcy after one year. Prior to then, you cannot borrow more than £500 without telling the lender that you are bankrupt. This is a double edged sword because if you do tell the lender then they may be reluctant to lend any money to you at all.
A further important restriction is that you cannot be involved with the management of a company whilst you are an undischarged bankrupt. This means that you cannot act as a director of a company, create, manage or promote a company without the court’s permission or indeed manage a business with a different name without telling people you do business with that you are bankrupt. If you are unsure about any of these restrictions and how they may apply to you, please contact us. Criminal and financial consequences can follow both for you as a bankrupt and anyone who assists you in breaking the above rules. For example, if you act as a director of a company whilst you are an undischarged bankrupt and somebody assists you with that, that person who is assisting you can be made liable for all the debts of that company.
The above restrictions will usually last for one year, i.e. until your bankruptcy is discharged. However, if you fail to cooperate with your Trustee (more on this below) then the Trustee or the Official Receiver can apply for a Bankruptcy Restrictions Order which extends the above restrictions for a specified period.
For this reason, it is important that you are aware of what duties and responsibilities you owe to your Trustee, in particular with regard to the provision of information to assist them in managing your bankruptcy estate. If you are unaware of these duties, your Trustee or the Official Receiver may interpret this as wilful non-compliance with can lead to costs penalties, further restrictions and sometimes criminal liability.
If you are unsure about your position, contact us for an initial consultation. Whilst your interest and your protection will always be our top priority, it may be the case that your money is best spent, at least initially, on advice to your partner or associate. Whoever we advise, you can be assured that we will protect your interests and guide you through the bankruptcy process.
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If you are already bankrupt or facing the threat of bankruptcy, there may be other options available. For example, you may be eligible for a debt relief order (DRO) or an individual voluntary arrangement (IVA). It may even be the case that you have a complete defence to the debt that is claimed from you. We regularly advise individuals facing financial difficulties and can recommend the best option available according to your circumstances.
A DRO is a simplified, quicker and cheaper alternative to bankruptcy suitable for debtors owing £20,000 or less and with few or no assets and little disposable income.
An IVA is a formal agreement reached with your creditors that is monitored by a third party called a Supervisor, who is usually a lawyer or an accountant. Such agreement can give you considerably more flexibility in the terms you can negotiate with your creditors for dealing with their claim than is available in a bankruptcy. We have considerable experience advising on and providing such agreements and will always strive to find the best and most cost-effective solution to your circumstances. We also advise on the situations that sometimes arise where you have been unable to comply with the terms of that agreement or are at odds with your Supervisor.
The ultimate decision is yours but after speaking to one of our team, you will be able to make an informed choice.
Often the partner or spouse of a bankrupt is the innocent victim in what follows. You may even be unaware that a bankruptcy order has been made but nevertheless get drawn into a world where all the cards seem to be held by your partner’s trustee in bankruptcy (the Trustee). All that you hold dear, including your home, can appear to be at risk.
You need specialist advice and the earlier that is sought the better. We can advise you on your entitlements and obligations and help steer you through the choppy waters of your partner’s bankruptcy and achieve the right result for you in negotiations with the Trustee.
Whilst early action is always a good investment, all is not lost if you seek advice late. Whatever the stage of the proceedings, we will strive to protect your assets and interests.
If you are already bankrupt and believe, for whatever reason, that the bankruptcy order should not have been made, or if you or a family member or friend has sufficient funds to pay off your debts in full, there are options available to cancel (annul) your bankruptcy by an application to court.
We have streamlined methods of dealing with these applications and will be able to offer you highly competitive rates.
If you believe the bankruptcy order should never have been made, this is essentially a dispute between you and the petitioning creditor, i.e. the person who caused your bankruptcy. We can advise you on the merits of your case and the best strategy to adopt. This can be a complex process, so it is best to seek advice as soon as possible after the bankruptcy order has been made. There are also additional options that we can discuss with you.
If you or a third party is able to pay off your debts in full, you will need to act quickly to provide a report to the court and there are time-limits to be complied with.
The information contained within this website is for information only and should not be construed as an accurate summary of the law or legal advice on any matter.
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"Specialist insolvency boutique Isadore Goldman is ‘the standout firm for contentious insolvency matters’ "