Bankruptcy

The term bankruptcy applies to individuals, not to companies. In the context of a business, an individual may be declared bankrupt because an unincorporated business, such as a sole trader or a partnership, has failed. The director of a company could also become bankrupt, often as a result of giving a personal guarantee to a loan.

Bankruptcy is a process by which a person is found to be unable to pay his debts. It may be that the debtor has cash-flow problems, so that he may be able to pay his debts eventually but is unable to pay them as they become due. The debtor could also have a liability that will arise in the future which he will not be able to pay. If the debtor cannot pay his debts in this way then he is insolvent. If the court then makes a bankruptcy order, the debtor will become a bankrupt and his property will vest in the trustee in bankruptcy for distribution to his creditors. Eventually, even if all his debts have not been paid, the bankrupt will be discharged and he will then be free from almost all of his previous debts. As an alternative to bankruptcy, the debtor could enter into an Individual Voluntary Arrangement.

If you would like to obtain legal advice on Bankruptcy, Contact Law can put you in touch with a local specialist Personal Insolvency Solicitor free of charge. So, if you have any questions or would like our help in finding local Personal Insolvency Solicitors please call us on 0800 1777 162 or complete the web form above.

Last Updated on 15/11/2011