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Bankruptcy and what it means

If you or your company owe more than £5,000 in Council Tax or Business Rates, and you have been sent a Summons, we may start bankruptcy or liquidation proceedings against you.

If we do, we will pass your account to a solicitor who will send you a statutory demand. A statutory demand gives you 21 days to pay your debt in full.

If you receive a statutory demand, you should contact the solicitor immediately.

If you don't settle the statutory demand, we'll present a petition for bankruptcy or liquidation in the County Court.

If a bankruptcy order is issued against you

If a bankruptcy order is issued against you the following things will happen:

  • Your home could be sold to pay your debts
  • Your bank accounts will be frozen
  • The official receiver will investigate your affairs
  • You will lose your credit rating and be prevented from getting credit
If you're declared bankrupt, the official receiver will control your spending for three years.

If a liquidation order is granted against your company

If a liquidation order is granted against you the following things will happen:

  • You could be forced to sell your home
  • Your company will be wound up by the official receiver
  • Your personal bank accounts could be frozen
  • You will not be allowed to be a company director

A bankruptcy order can be made even if you refuse to acknowledge the proceedings or agree to them. You should co-operate fully once bankruptcy proceedings have started.

The Official Receiver is responsible for looking into your financial affairs for the period before and during your bankruptcy. Any asset that might have been acquired during the term of the bankruptcy, such as inheritances, insurance payouts/maturities, equity in property, windfalls and possibly pension income, will be lost and you will no longer control your assets.

The Official Receiver will still take your home unless your partner can prove they have an interest in the property. If this is the case the Official Receiver will allow your partner to purchase your share of the equity. If they can't do this, the trustee in Bankruptcy will, after 12 months, have the right to take possession and issue an eviction order.

Your trustee can apply to Court for an income payments order, which requires you to make contributions towards bankruptcy debts from your income. The Court will not make this order if it would leave you without enough income to meet the needs of you and your family. The order can be changed if your income goes up or down.

 

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