It is possible to cancel a bankruptcy order and get back on your feet. Our brilliant team have helped many people do this over the last 20 years. Let us help you too.
The making of a bankruptcy order does not have to be final and it is possible to apply to the court to cancel the bankruptcy order. The process is known as the “annulment” of the bankruptcy order.
The effect of the annulment of a bankruptcy order is that the bankrupt is returned to their pre- bankruptcy position as if the bankruptcy order was never made against them.
The list below contains some examples of the circumstances where the court has the power to annul a bankruptcy order:
1. Where the bankruptcy order should not have been made in the first place
The court can annul a bankruptcy order if there were grounds existing at the time which the bankruptcy order was made which support the claim that the bankruptcy order should not have been made.
Examples of where a bankruptcy order should not have been made include:
- where it seems that the bankruptcy proceedings were an abuse of the process of the court.
- where a bankruptcy order is made against someone under the age of eighteen in respect of a debt that is not legally enforceable against them.
- if there are no debts provable in the bankruptcy estate.
- where service was defective prior to the making of the bankruptcy order.
- where an earlier bankruptcy order was made in another court, unknown to the petitioner in the later case.
2. Where the debts and expenses of the bankruptcy have either been paid or secured to the satisfaction of the court
The court can annul a bankruptcy order if it is shown to the satisfaction of the court that all of the debts, costs and expenses of the bankruptcy estate have been paid in full or are secured.
a. What are the debts to be paid in full or secured?
All debts that have been proved in the bankruptcy estate must be paid in full or secured to the satisfaction of the court.
If a creditor cannot be located or a debt is disputed the bankrupt must provide adequate security to the court to satisfy any sum that may be subsequently proved to be due to the creditor.
Where the bankrupt provides security in respect of an unpaid creditor (such as by paying a sum into the court), the court may direct that details of the alleged debt and security are advertised to bring the debt to the attention of the unpaid creditor.
b. What are the expenses of the bankruptcy estate?
The expenses of a bankruptcy estate include the Official Receiver’s costs and expenses incurred in the bankruptcy estate and the trustee in bankruptcy’s costs and expenses incurred in the bankruptcy estate (including their legal costs and disbursements).
c. What does “secured to the satisfaction of the court” mean?
Debts are secured where the creditor holds any security for the debt such as a mortgage over a property or a hire purchase agreement in respect of a car.
It is the court who decides whether the security granted to the creditor is satisfactory.
3. Where an individual voluntary arrangement has been approved.
The court can annul a bankruptcy order if it is shown that an individual voluntary arrangement (“IVA”) has been approved by the bankrupt’s creditors.
An IVA is an agreement a person enters into with their creditors in which they agree to pay all or part of their debts. The IVA is supervised by an insolvency practitioner who will collect the IVA payments and distribute them to the creditors.
We can assist individuals in preparing an application to annul a bankruptcy order based on the grounds that the bankruptcy order should not have been made in the first place; that the debts and expenses of the bankruptcy have either been paid or secured to the satisfaction of the court; and where an individual voluntary arrangement has been approved.
Should you require any assistance please contact us.