HomeFWJ TakeawayBankruptcy helpBankruptcy restriction orderAre you being threatened with a bankruptcy petition?

If you are threatened with a bankruptcy petition it can be very worrying. Our expert team have advised 100's individuals in the last 20 years. And helped avoid bankruptcy on many occasions. Let us help you too.

What is a bankruptcy petition?

A bankruptcy petition is an application for a bankruptcy order to be made against an individual which a creditor can present to the court on the grounds that an individual is unable to pay their debts.

The court will regard an individual as being unable to pay their debts if either of the following occurs:

  • A creditor who is owed more than £5000 serves a statutory demand for the debt due and it is not paid or secured (for example, by way of a charging order or a guarantee to provide something else of the same value); or
  • A settlement is not agreed, within 21 days, and the debtor has not applied for the statutory demand to be set aside.

A bankruptcy petition will normally be personally served on an individual and will be endorsed with details confirming the date, time and address of the court where the court will decide whether to make a bankruptcy order.

Normally, the hearing of a bankruptcy petition, will not take place until at least 14 days have passed from the date that the Statutory Demand was served.

In addition, a bankruptcy petition can also be presented by either the individual themselves if they wish to make themselves bankrupt or, if an individual has already entered into an Individual Voluntary Arrangement, by the supervisor of their Individual Voluntary Arrangement.

Why should you defend a bankruptcy petition?

If an individual fails to defend a bankruptcy petition presented against them, the court will normally proceed to make a bankruptcy order against them.

Bankruptcy has many adverse consequences. If a bankruptcy order is made against an individual, the Official Receiver (who is a civil servant in the Insolvency Service and an officer of the court) will be appointed to review the bankrupt’s affairs.

  • the Official Receiver has responsibility from the date of the bankruptcy order for administering the bankruptcy estate and protecting the bankrupt’s assets for the benefit of the bankrupt’s creditors.
  • if a bankrupt has assets such as a property, a Trustee in bankruptcy will normally be appointed to investigate the bankrupt’s affairs; sell the bankrupt’s assets and distribute the money among the bankrupt’s creditors.
  • in addition, once a bankruptcy order is made, a bankrupt’s credit rating will be affected which will cause problems they hope to borrow money, apply for credit or obtain a mortgages.

Until a bankrupt is discharged from their bankruptcy, they may not

  • act as the director of a company or take part in its promotion, formation or management unless they apply to the court for permission to do so;
  • may not act as an insolvency practitioner, or
  • as the receiver or manager of the property of a company on behalf of debenture holders and cannot be a MP in England or Wales.

Further, some professional institutions may dismiss a Bankrupt from their professional membership potentially destroying their careers. Institutions such as the Law Society, the Institute of Legal Executives, the Institute of Chartered Accountants, Local Authorities, National Association of Estate Agents may treat Bankruptcy as a mandatory dismissal. Others such as The Royal Navy, Royal Airforce, Royal Army, Metropolitan Police, Royal Pharmaceutical Society, Royal College of Veterinary Surgeons and the Royal Institute of Chartered Surveyors have a policy of discretionary dismissal for Bankrupt members.

If an individual does not wish to be made Bankrupt it is vital that they act quickly to defend a bankruptcy petition.

How to defend a bankruptcy petition

If an individual wishes to defend a bankruptcy petition, it is vital that they attend the hearing of the bankruptcy petition at the Court or appoint solicitors to appear on their behalf.

  • it is possible to defend a bankruptcy petition if it can be shown that the debt is substantially disputed.
  • it will be necessary to clearly demonstrate with evidence why the debt is not due, such as providing evidence that the debt has been paid, or establishing a counterclaim or claim for set-off.

In addition, it may be possible for the individual to negotiate a settlement with the creditor who has presented the bankruptcy petition, for example by proposing instalment payments or agreeing to provide a charge over a property.

If an individual has a number of other debts which they are unable to pay and would rather enter into an Individual Voluntary Agreement, it may be possible to get the bankruptcy petition hearing adjourned for a period of time whilst a proposal for an Individual Voluntary Agreement is put to the individual’s creditors.

We can help you

We can assist individuals in defending bankruptcy petitions by preparing evidence demonstrating why the debt is substantially disputed and representing them at the bankruptcy petition hearing.

We can also enter in to negotiations with creditors to achieve a settlement outside of the court to avoid a bankruptcy order been made.

We have experience of acting for individuals who have been pursued by a wide variety of creditors including, HM Revenue & Customs, local authorities, banks and building societies.

Contact our brilliant team today for help whatever your bankruptcy problem. We ae here to help.

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