Bankruptcy


Bankruptcy is the key alternative to an IVA. Despite legislation that has attempted to reduce the stigma of bankruptcy many insolvent individuals are very keen to avoid being labelled as bankrupt.
 
Bankruptcy now, in the majority of cases, lasts for no more than 12 months. It’s a very effective, yet inflexible, solution. An individual can file for their own bankruptcy or a creditor may petition for bankruptcy.
 
There is little scope to be flexible about timing of the sale of an individual’s assets and this is predominantly an issue with regard to any family home.
 
In brief the assets of an individual are effectively transferred to the ownership of the bankruptcy estate and these assets are applied to the creditors of the individual that are transferred as liabilities of the bankruptcy estate.
 
The individual will therefore emerge from bankruptcy free from liabilities but also “free” from assets. There are certain assets that remain with the individuals, tools of their trade and normal household effects for example.