You are here: Home > Mortgages > Refused a mortgage > Guide to bankruptcy

How to make someone bankrupt

This publication:

If you want to make yourself bankrupt, please read our publication 'Dealing with debt - How to petition for your own bankruptcy'. If a firm, rather than an individual, owes you money, please read our publication 'Dealing with debt - How to wind up a company that owes you money'. 

This publication is only a guide, so you may also want to read the relevant legislation in the Insolvency Act 1986 and the Insolvency Rules 1986 as amended.

What is bankruptcy?


The court can make a bankruptcy order against an individual who fails to pay his/her debts. A bankruptcy order makes sure that the assets of the bankrupt are shared out fairly among the creditors and imposes certain restrictions on the bankrupt. Bankruptcy does not necessarily mean that the debts of the bankrupt will be paid.

Where can I get specific advice about dealing with someone who owes me money?

Before you take any action to put an individual into bankruptcy, you should get your own legal or financial advice about bankruptcy and the other options available to you. 

The Insolvency Service and the courts cannot advise on specific insolvency problems, for example whether you should make someone bankrupt or whether you should look at alternatives. You can get advice from your local Citizens Advice Bureau, a solicitor, a qualified accountant, an authorised insolvency practitioner, a reputable financial adviser, or a debt advice centre. 

How is a bankruptcy order made?

You apply to the court using a 'bankruptcy petition'. A bankruptcy petition is usually presented by a creditor on the grounds that the debtor cannot pay his/her debts. A bankruptcy petition can also be presented by either the debtor or, if the debtor has already made a voluntary arrangement to deal with the debt, by the supervisor of this arrangement.

How do I prove to the court that the debtor cannot pay his/her debts?

The court will regard an individual as being unable to pay his/her debts if either of the following occurs:
A creditor who is owed more than £750 serves a 'statutory demand' for the money due and it is not paid or secured (for example, by a guarantee to provide something else of the same value); or a settlement is not agreed, within 21 days, and the debtor has not applied for the statutory demand to be set aside.
You can get the form for a statutory demand from your local court or The Insolvency Service website at www.insolvency.gov.uk. The forms for the statutory demand are:

The completed form must usually be served on the individual in person. The creditor must have proof of service, so it is usual to employ a process server to carry out this function (these are listed in Yellow Pages under 'detective agencies'). The court is not involved in the issuing of statutory demands, so no court fee is payable.

In which court should I present a bankruptcy petition?

Not all courts can deal with bankruptcy. You can present a bankruptcy petition at the High Court in London, or in a county court that deals with bankruptcy matters. Generally, you should present the petition for bankruptcy to the court that deals with the area where the debtor has lived or traded for the longest period in the previous six months. If the debtor lives in one court district and runs a business in another, you should go to the court dealing with the district where the business is, as this takes priority over the home address. If you are not sure which court you should go to, please phone your nearest county court for advice.

The address and phone number of your local county court are listed under 'Courts' in the phone book. Look for: 'civil courts - county courts' and not magistrates' courts. You will need to contact the court to find out if it has jurisdiction (authority) to hear a bankruptcy case. The Court Service website at www.courtservice.gov.uk has a list of county courts with bankruptcy jurisdiction and an index that shows what geographical area they cover. 

How do I present a bankruptcy petition?

You cannot just complete the petition and present it to the court. Insolvency law requires that: 

You may have to make further statements of truth if, for example, you wish to withdraw the petition. Therefore, to ensure that you meet all legal requirements, it is usual to ask a solicitor to issue a bankruptcy petition.

Here is a summary of the procedure (also see Annex A): 

A deposit and court fee is payable on presentation of the petition (see below). 

The court then fixes the place and date when the petition will be heard. Normally there must be at least 14 calendar days between the petition being served on the debtor and it being heard in court.
A copy of the petition must be served on the debtor in person. If this is not possible the court can, on application, order that the petition be served on the debtor by alternative means, such as by post. This is known as 'substituted service'. A copy must also be sent to any supervisor of a voluntary arrangement. Immediately after service, the petitioner must file at court a statement of truth verifying service of the petition (form 6.17/6.18).

If the debtor wishes to oppose the petition, he/she must give the court a statement of truth at least 7 calendar days before the hearing.

On the day of the hearing, you must prepare a list of people intending to appear at the hearing for the court, using form 6.21.

At the hearing, you (the petitioner), creditors (who have told you they intend to appear), the debtor and any supervisor of any voluntary arrangement all have the right to be heard. The court can then:

All the forms are in the Insolvency Rules 1986 as amended, and you can get them from legal stationers - see Yellow Pages. Some of the forms are available on The Insolvency Service website at www.insolvency.gov.uk where you can print them off for completion.

How much will it cost to make someone bankrupt?
What happens after someone is bankrupt?

After making a bankruptcy order, the court usually appoints the Official Receiver (a civil servant in The Insolvency Service and an officer of the court) to be receiver and manager of the bankrupt's affairs. The Official Receiver has responsibility from the date of the 
bankruptcy for administering the bankruptcy and protecting the bankrupt's assets.

The Official Receiver will also act as trustee of the bankruptcy estate unless an insolvency practitioner is appointed. If this happens, the Official Receiver still has a duty to investigate the bankrupt's affairs. So 2 people may be involved in the bankruptcy:

Certain restrictions and duties are imposed on a bankrupt - for further details, please read our publication 'Guide to Bankruptcy'.

Can anyone appeal against or stop the bankruptcy?
Where can I get more information?

Our publications give more details of insolvency procedures. Please see 'Guide to Bankruptcy' and 'A Guide for Creditors'. 

You can obtain further copies of this publication from the following website: http://www.dti.gov.uk/publications
You may also order copies of our publications by telephone by calling the Publications Orderline on 0845 015 0010. You may also fax orders to the Orderline on 0845 015 0020. Minicom users should telephone 0845 015 0030.

All of our publications are also available on our website www.insolvency.gov.uk
 
For general enquiries you can contact The Insolvency Service Central Enquiry Line on 0207 291 6895 or email Central.Enquiryline@insolvency.gsi.gov.uk
For general enquiries to the Court Service you can call its Customer Service Unit on 0207 210 2266 or email cust.ser.cs@gtnet.gov.uk
The Court Service publishes a series of information publications on their website at www.courtservice.gov.uk
This publication provides general information only. Whilst every effort has been made to ensure that the information is accurate, it is not a full and authoritative statement of the law and you should not rely upon it as such. The Insolvency Service cannot accept responsibility for any errors or omissions as a result of negligence or otherwise.

Bankruptcy terms - what do they mean?

Annulment of a bankruptcy order - a court order that cancels the bankruptcy order.

Bankruptcy order - a court order that places an individual into bankruptcy.

Bankruptcy petition - a request to the court for an individual to be placed into bankruptcy, giving the reasons why.

Creditor - someone to whom the individual owes money.

Debt - the money the individual owes.

Debtor - the individual who owes money.

Discharge - freed from bankruptcy or freed from the restrictions of bankruptcy.

Execution - if a creditor has obtained judgment against the individual and has not been paid, the creditor can apply to the court for 'execution', which gives the sheriff/bailiff the power to seize the individual's goods to pay the debt.

Individual Voluntary Arrangement (IVA) - a formal arrangement by which a debtor pays his/her creditors, either in full or in part. The debtor would need to apply to the court with the help of an authorised insolvency practitioner, who would supervise the arrangement and pay the creditors in accordance with the accepted proposals.

Insolvency practitioner - an authorised person who specialises in insolvency, usually an accountant or solicitor. Insolvency practitioners are authorised by the Secretary of State or one of certain recognised professional bodies.

Liabilities - the money the individual owes.

Trustee - the trustee is either the Official Receiver or an insolvency practitioner who takes control of the bankrupt's assets. The trustee's main duties are to sell these assets and share the money out among the creditors. 

Rescission - one of the ways in which the court can cancel the bankruptcy order.

Recognised professional body - a professional body that the Secretary of State allows to authorise a person to act as an insolvency practitioner.

Statement of truth - a statement in writing and on oath, which is sworn before an authorised person, e.g. an authorised solicitor or court official.

Verify - confirm that a document or statement is true.
 
Annex A - Petitioning for bankruptcy

 

© Crown copyright 2005
The material featured on this page is subject to Crown copyright protection unless otherwise indicated and has been provided by The Insolvency Service.
Published October 2005

You should seek appropriate advice before acting on any information contained on this page.