It is always sensible to try and avoid formal bankruptcy - no matter how bleak things might appear. Our brilliant team can help advise you on all the options.
If an individual fails to defend a bankruptcy petition presented against them, the court will normally proceed to make a formal bankruptcy order. This can be very bad for the individual concerned.
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;
- act as an insolvency practitioner, or
- act 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 Air Force, 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.