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Bankruptcy by Petition
There are two different ways in which you can initiate bankruptcy proceedings. The first is voluntarily, in which you yourself file for bankruptcy with the court. The second way is where bankruptcy is forced upon you by the people you owe money to. This method is known as bankruptcy by petition. For a creditor to apply for this, you must owe them at least £5000. Alternatively, multiple creditors can join together to meet the £5000 requirement and file a bankruptcy petition against you as one.
What are the Requirements?
For a creditor to apply for bankruptcy by petition certain criteria must be met. These include:
- The debt is more than £5000
- The debt is unsecured
- There is evidence that you are unable to pay your debt*
- There is evidence that you have the means to pay your debt but are simply choosing not to
*For example, if a creditor had previously attempted to retrieve the money you owe them but were unsuccessful because you did not have the sufficient assets needed to cover your debt. This could then be seen as evidence that you are unable to pay your debts
If any of the above criteria are met, your creditor is legally entitled to begin filing for your bankruptcy.
Is Bankruptcy my best option?
Bankruptcy is the best route for many with extreme debt, however it isn’t the only option. Depending on your level of debt, your future financial outlook and other factors such as your profession, and your assets, there may be other better options. These options include debt consolidation, Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs). Complete our quick online assessment to see which is best for you.Take our quick online test
What Happens Next?
The process is very similar to declaring bankruptcy yourself in that your creditor will have to complete a bankruptcy petition form and submit this to the local court in charge of bankruptcies. Furthermore, expenses such as bankruptcy petition costs and filing fees are also similar. The court will then ask for you to complete a Statement of Affairs upon which they will then base their decision whether to proceed with the bankruptcy or not.
Statement of Affairs
You will be required to organize and gather as much information as you can regarding your personal financial situation and put all of this into a document called a ‘Statement of Affairs’. These details will include a complete list of all unsecured creditors, all debts, your monthly outgoings, your monthly income and an approximate calculation of your disposable income.