Being made bankrupt vs making yourself bankrupt?

elljay

As subject line really, is there a difference in the procedure? I'm a sole trader and being threatened with bankruptcy by a creditor. I was thinking of doing this myself though have been desperately trying to avoid it by paying bits off here and there to keep head above water. I think I've come to the end of the road with that now and would love a decent night's sleep!

I'm thinking of letting his statutory demand run its course but wonder if there's any advantage in getting in first (apart from the £700 that is). I would love him to get some money back as he's been very patient so have also been looking at an IVA. I've only got 21 days to decide so need to do a lot of thinking and research.

Is the procedure the same, re court etc, do I have to do the same forms, wait for a call from the OR and all that as you do if you're making yourself bankrupt?

Thanks for the advice.

National_Debtline

Hello there,

The only differences are in respect of the process that needs to be undertaken (i.e. the statutory demand first if a creditor is taking the action) and that you'll avoid paying the fee. If they progress from the statutory demand you'll receive a 'creditor's petition' if they mean business. I must add that a very high number of statutory demands are sent out simply as a scare tactic. Unless the creditor can recoup their costs through the bankruptcy you may find that their behaviour is simply that.

Very best wishes,

David @ National Debtline.

elljay

Golly gosh, that was quick. Thank you very much David. This guy knows I have no assets (rented house, ancient - not antique - car etc) but the situation needs sorting. I can't let his debt build up any more. He knows he won't get anything via bankruptcy which is why I thought I might apply for an IVA so that way he would get something back, as would the other people I owe to. I have a bank loan, normal utility bills for the business premises etc, none of which are more than a month or two behind and all relate to the business not my home though I appreciate I have responsibility to all equally as my business isn't a ltd co.

Very helpful, thank you.

National_Debtline

My gut feeling is that their behaviour is simply a scare tactic although I have seen those in rented accommodation being made bankrupt [usually by HMRC]. The Debt Camel website has a really good page outlining the key differences between an IVA and Bankruptcy. A key concern of mine for anyone who is self-employed and is considering an IVA is to ensure that the payments can be met for the full term. If your income fluctuates I would be mindful of taking the IVA route.

As you are self-employed you may find our sister organisation Business Debtline useful: www.bdl.org.uk

Also, hot of the press is the very latest version of our self-help pack 'Dealing with your Business Debts' - http://www.bdl.org.uk/images/00_EW_BDL_Self%20help%20pack%202014.pdf

Hope you find this info useful!

- David.

Rrushi_Shqiptar

Not really helpful I suppose but I was made bankrupt by Arrow Global Ltd bought the debt from MBNA £2,500.

IN the end they got nothing nor did any other creditors who had bigger debts, fter they made me sell the hse and my ex got her share my half went to the IP his charges and the secretary of states cut meant nobody got anything just the accountant and govt....

alastairq

............but doubtless Arrow Global were able to offset the debt-in-bankruptcy against tax, for example?

They certainly got nowt out of me, when they went to Court with their claim...

elljay

Thank you for all the replies. I spoke to BDL a couple of weeks ago, who were absolutely brilliant and they recommend I make myself bankrupt. But that was before I received the stat demand.

Can I just be clear then, after receiving the statutory demand (which also demanded an extra £100 for the privilege!), I will then receive a creditor's petition document. After that will I be given a date for a court appearance? I then have to present the usual forms with expenditure and income and it goes from there, ie call from OR with further more detailed call a few days later. Will this guy or his solicitor be there?

I can't pay him - much as I really want to, and he knows this. I need for this to happen really to put a stop to it though I would far prefer to pay him and am still toying with an iva. If that fails for some reason (I'm in my 60s) in the future then at least I will have tried and he will have received something. I have applied for a new job which I am likely to get and which will increase my income by about £250 a month so that should help.

Thanks for the advice, how on earth did we manage before this forum!

alastairq

A point or two to add...?

A BAnkruptcy Petition can be granted in your absence.

It might be a good thing to start organising yourself for that eventuality? [Ie, opening basic bank accounts withe the BR-tolerant [2] banks, for example?]

You have an intolerable debt situation you are insolvent]... a BAnkruptcy petition does not [necessarily] mean, no creditors receive anything.....however, all your creditors will be treated equitably.

I cannot understand why you would risk commencing an IVA [ie, create an additional creditor, the IVA company?] at your age, when there is definite uncertainty the IVA will be completed?

And, should the IVA fail, then Bankruptcy will follow?

Also, you need to be wary of 'favouring' one creditor over another?


This is to be avoided prior to a BAnkruptcy petition...since the Official Receiver might take steps to restore the situation, so that all your creditors may be treated equitably.

I think your greatest concern should be whether a CCJ is sought?

Followed by something like an attachment-of-earnings?