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| Bankruptcy
may be applicable to an individual who is unable
to pay his/her debts within terms. A bankruptcy
petition to Court may be applied for either by
a creditor who is owed more than £750, by
the individual him/herself, by the Supervisor
of a failed IVA, or by the Official Petitioner
(effectively the Government).
The
Court's discretion to dismiss a validly based
creditor's petition is limited. If a debtor has
no grounds to have the petition set aside, an
IVA may be considered. Alternatively, the debtor
may consider that the advantages of bankruptcy
outweigh the disadvantages. |
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The
principal advantage of bankruptcy is that creditor
claims rank against the bankruptcy estate of the
bankrupt, no longer strictly against the debtor,
and the debtor may refer all of his creditors
to the Trustee in bankruptcy responsible for realising
the estate assets.
The
principal disadvantage is that the debtor, with
certain exceptions, loses assets, including any
equity in a house, to the Trustee. Until
recently pensions
have been largely excluded from bankruptcy estates.
This aspect should be clarified by case law in
2013. The
debtor may also have to make contributions from
income to the Trustee. |
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Bankruptcies
following from bankruptcy orders made since 1st
April 2004 normally last for up to one year and
impose significant restrictions on the bankrupt,
particularly as regards disqualification from
holding directorships, credit taking and disclosure.
Bankruptcy offences are widely defined, are retrospective
in effect, and can carry severe penalties. More
severe restrictions apply to bankrupts who are
identified as being culpable.
A
professional review of the full implications of
potential bankruptcy in the context of a debtor's
particular circumstances can bring fuller understanding
and a sense of control in place of uninformed
anxiety. |
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This
information is written in general terms and cannot
be fully comprehensive. Its application to particular
circumstances will depend on specific facts. The
views and suggestions set out are not intended
to constitute professional advice or to be a substitute
for specific advice. |
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IP Services Ltd
Registered in England No. 03602204
Director: Peter O'Duffy F.C.C.A. R3
Licensed in the United Kingdom by ACCA, 29
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