Voluntary or involuntary BR?

Taxinfo_2

Hi all,

Can someone explain the difference between voluntary BR or involuntary BR? And are there pros and cons between the two excluding the usual BR cons of course.

Thanks

alastairq

Hi.in my view, voluntary BR is a BR you petition for yourself.

Involuntary BR is a BR petitioned by another party [creditor].


The major difference is, the former, you pay for yourself..the latter, the creditor pays for.

Since a personal petition costs around £700 , that can be significant.

With a personal petition, the petitioner controls exactly how and when it all occurs.

This is important, certainly with regards preparation.....[obtaining basic bank accounts beforehand, for example?].......or...if a re-possession of property is on the cards, getting the home re-possessed and being able to move into rented accommodation before the BR....
.

A BR which is petitioned by a creditor may well come as a surprise....with consequent loss of control over events.

Taxinfo_2

Thanks Alastair

That's what I initially thought, however if I go voluntary does it mean it's wiped off after a number of years and involuntary ie being forced to then even if you go BR the debtors can still demand repayment indefinitely until it's all repaid?

Also does anyone know how long it takes from the start to the day your properties buisness begins winding down?

Thanks

alastairq wrote: »

Hi.in my view, voluntary BR is a BR you petition for yourself.

Involuntary BR is a BR petitioned by another party [creditor].


The major difference is, the former, you pay for yourself..the latter, the creditor pays for.

Since a personal petition costs around £700 , that can be significant.

With a personal petition, the petitioner controls exactly how and when it all occurs.

This is important, certainly with regards preparation.....[obtaining basic bank accounts beforehand, for example?].......or...if a re-possession of property is on the cards, getting the home re-possessed and being able to move into rented accommodation before the BR....
.

A BR which is petitioned by a creditor may well come as a surprise....with consequent loss of control over events.

alastairq

hi.....are we talking about two different things here..namely personal Bankruptcy [to which I was referring], or [company] liquidation?

Or, are you even thinking of IVA [Individual Voluntary Arrangement..also a form of insolvency.]

With personal BR, all unsecured debts are included within the BR estate [apart from certain, notable exceptions].

Any pre-existing secured debts, which subsequently become unsecured, will also fall into a BR.

A personal BR usually lasts for one year, whence the BR is discharged.[again, subject to things like BRU/BRO, etc].

The BR will remain on one's personal credit file for 6 years from petition....and is recorded forever in the London Gazette.

If an IPA/IPO is sought, then that will last for 3 years from date of agreement or Order.
With personal BR , it doesn't matter whether a creditor petitioned, or the individual concerned petitioned, the rules are the same.


Your question regarding business is beyond my scope at present.......usually if self-employed, one's business ceases when the Court stamps the petition.
It can be re-started under another name..or, if the name remains the same, one has to inform anybody who needs to know of the BR status...but that is my take on the matter...others may like to correct me.

With a personal BR, if property is involved [to which the OR wants their share for the BR]....then much will depend on the levels of equity available...for example, with a family home, the OR will look at it usually at the 2 year 3 month period..and must have made some sort of decision by 3 years.

Mouse1812

Taxinfo wrote: »

however if I go voluntary does it mean it's wiped off after a number of years and involuntary ie being forced to then even if you go BR the debtors can still demand repayment indefinitely until it's all repaid?

No, it makes no difference how you are made bankrupt, bankruptcy is bankruptcy (there are no different types) and all debts are cleared by the process.

Taxinfo wrote: »

Also does anyone know how long it takes from the start to the day your properties buisness begins winding down?

While technically your existing business will “cease” on bankruptcy you may be allowed to continue trading (start again) and should be allowed to keep the tools of your trade - especially if that is your only source of income. You are, after all, allowed to work; tis a Human Right you know.

Re trading name, you can trade under your own name or the name of the business which you were trading under before bankruptcy. You only have to notify those you trade with if you start trading under a different name - not an issue if no credit is involved.

I don’t think you meant property as in bricks and mortar did you?

alastairq

thank you Mr Mouse..I just knew I'd left the 'not' out......darned Dell keyboards!

sparkiedave

what happens about any income tax liability?

Mouse1812

sparkiedave wrote: »

what happens about any income tax liability?

It gets included in the bankruptcy - and written off

Taxinfo_2

Thanks all I guess it's the same other than one you have some control of the timescales certain things happens albeit at a small cost.

So does that mean knowing your about to go BR and wish to continue trading after the event, can you technically still still get away with not paying income tax? I not suggesting anyone does it just a question.

Taxinfo_2

Thanks mouse

Can you elaborate further with regards to the ability to retain tools for trade etc? As I thought upon bankruptcy a third party dept collector literally come and liquidate your possessions?

Thanks

Mouse1812 wrote: »

No, it makes no difference how you are made bankrupt, bankruptcy is bankruptcy (there are no different types) and all debts are cleared by the process.



While technically your existing business will “cease” on bankruptcy you may be allowed to continue trading (start again) and should be allowed to keep the tools of your trade - especially if that is your only source of income. You are, after all, allowed to work; tis a Human Right you know.

Re trading name, you can trade under your own name or the name of the business which you were trading under before bankruptcy. You only have to notify those you trade with if you start trading under a different name - not an issue if no credit is involved.

I don’t think you meant property as in bricks and mortar did you?

Mouse1812

So did I, honest, it scared the **** out of me.

BUT

nothing happened

Since when I've read a lot.

You need to know about "exempt" assets. The law protects you (as well as your creditors). It's late, I've enjoyed a touch too much .... I'll be back, hic, sometime soon ..