A step by step guide to bankruptcy proceedings

Legal threshold  

You may apply to make someone bankrupt if you are owed at least £5,000. Although you can commence bankruptcy proceedings without engaging the services of lawyers, it is strongly advised that you seek prior legal advice as bankruptcy proceedings can be complicated. There are serious implications in making someone bankrupt and you want to be sure that you are following the correct procedure and requirements.

Statutory demand 

Once you have decided to make someone bankrupt, you should serve the person with a statutory demand. The statutory demand should be served by a process server who will then provide a statement as evidence to confirm service of the statutory demand. A statutory demand is a formal request for the debtor to pay the sums owed to the creditor. In response to the statutory demand, the debtor may either apply to the court to set aside the demand or pay the sums demanded. 

Check for other bankruptcy petitions 

Following the service of the statutory demand, you must carry out checks to find out if the debtor has had any bankruptcy petitions against them within the last 18 months. If you find an existing petition then you may support that petition rather than file a new petition. You may proceed with your petition if there are no existing petitions against the debtor.

Presenting the bankruptcy petition 

If the debtor does not pay the sums demanded or does not apply to set aside the statutory demand, you should proceed to the next step by presenting a bankruptcy petition in court. To present a bankruptcy petition you must file the petition with the relevant court. The relevant court will depend on the debtor’s address and whether you are submitting the petition online or in person.  

Serving the petition on the debtor 

After presenting your bankruptcy petition, you must then serve a copy of the same petition on the debtor. The petition must be personally given to the debtor. A process server should be hired to give the bankruptcy petition to the debtor. If the debtor evades service despite several attempts to give them the petition, then you must apply to the court where you presented the petition for permission to serve the debtor by alternative means. For example, you may seek permission from the court to post the petition to the debtor. The process server should then provide a statement as evidence to confirm when and how the petition was served on the debtor.

Court hearing 

After the petition has been presented the court will set a court date to hear the bankruptcy petition — both parties are expected to attend the hearing. At the hearing, the petitioner will be required to provide a statement confirming how much of the debt remains outstanding. The petitioner must also provide the judge with a list of creditors who intend to attend the bankruptcy hearing. 

At the bankruptcy hearing, the judge will hear evidence from the parties involved. Depending on the evidence before the judge, the judge could declare the debtor bankrupt at that same hearing or adjourn the matter to a later date. The judge may also dismiss the bankruptcy petition if the petitioner does not successfully prove their entitlement to make the debtor bankrupt.

 

 

This is an overview of the bankruptcy process — please contact us for specific advice.