Applying for bankruptcy v being made bankrupt by a creditors petition

Sizzers

This is much a curiosity question as anything else but what is the difference between the following:

Applying to be made bankrupt (successfully) or being declared bankrupt due to a creditors petition?

Most people appear to go through the self-declaration route and so why is this? One costs you £680 where the other costs you nothing.

Your thoughts appreciated.

sourcrates

Most of the time, a company will not make you bankrupt if you don`t possess any assets, there are some that will, and especially HMRC who just do so because they can.

It would simply be a waste of money for most companies to bankrupt you, best part of a grand or more, for what gain ?

They may threaten to bankrupt you, but the majority of the time, its just a threat with no real merit, so can`t be relied upon.

If you want or need to go bankrupt for definite, then best to do it yourself, pay your £680 quid and in 99.9% of cases, the job is done.

Sizzers

But how would they know you have no assets? 

Unless they have conducted a property search and discovered that you in fact own a property, how would they know what other assets you may own?

This is assuming that bailiffs etc have been denied entry to make an inventory of your possessions and they have no other information  regarding your financial affairs?

MalMonroe

Hi, here's what StepChange say about creditors making you bankrupt -

https://www.stepchange.org/debt-info/creditors-making-you-bankrupt.aspx

And also, Citizens Advice -

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy/creditors-making-you-bankrupt/creditor-trying-to-make-you-bankrupt/

And the government says - https://www.gov.uk/government/publications/guide-to-bankruptcy/guide-to-bankruptcy

If you do have any concerns about bankruptcy though, you could phone to ask for advice from StepChange, Citizens Advice or National Debtline, they are all free debt help agencies.

Minkym00

Companies DO pursue people into bankruptcy even when they have no assets. Some do it (especially the peer to peer lenders) because they need to be seen to take action against bad debts or they would be unable to attract investors. Others do it as the borrowers have given personal guarantees on business debts and if they don't enforce PGs what's the point in having them? 

My personal view is, if the lender is threatening to do it and you have no assets to protect, then let them and save yourself £680. 

Sizzers

Thanks for the replies, I appreciate it.

As I said it was more of a curiosity question but I myself could see no difference between the two apart from that the creditor pays the (very more expensive) fees. 

I guess I was really wondering why people pay to apply for bankruptcy rather than wait for a creditor to petition for it and avoid the £680 cost. I'm new to this but I also guess people have their own either practical and/or personal reasons for this.

Anyway, I have returned from work and received a letter from the process server informing me that he had called at an earlier date and I wasn't available (I was at work) with another date arranged.

Maybe you don't know the answer to this, in which case I will need to start a new post, but is it basically the same as signing for a recorded/registered letter just to say you have received the sealed petition?

I believe it is but just wanted to double check that's all.

Thanks again all.

Minkym00

You don’t need to sign anything to say you’ve received it. The process server wants to hand the petition to you personally so that he/she can inform the court via a witness statement that you have been “personally served”. If the process server can’t personally serve you then the creditor has to ask the court if they will allow “substituted service” which means that the court will deem you to have been served if the petition is just posted through your letterbox. 

MissFlossy222

One reason people may choose to pay the bankruptcy fee themselves is that they're in control of the timing. They can make sure they've got all their ducks in a row before pressing the button.

Minkym00

MissFlossy222 said:

One reason people may choose to pay the bankruptcy fee themselves is that they're in control of the timing. They can make sure they've got all their ducks in a row before pressing the button.

That may be true but the OP will be given a fair bit of notice before the bankruptcy order is made. There’s 2-3 months usually. 

Sizzers

Thank you for both replies and I can certainly understand Miss Flossy's reasoning.

I received a letter yesterday, the 12th, informing me that the process server had called previously to serve the creditors petition but I wasn't in. 

The form it contained was dated the 6th so I am assuming that was the date he called. As the petition has to be served personally why do they not give notice beforehand of the date they are serving it? Same with a statutory demand.

He is calling again next Tuesday, which is fine as I have now rearranged things at work. Unless I am completely misinformed the petition contains the hearing date with a minimum requirement of at least 14 days notice of this.

Obviously they have to make allowances for the length of time it may take to serve the notice in setting the date but, that you know of, is it really 2-3 months?

I was thinking they give a hearing date, allowing let's say two weeks to serve it and perhaps a bit longer to satisfy the 14 day notice period which is why I am a bit bemused.

I know there may be a a backlog depending on the area (Warwick court I am expecting) but I have absolutely no idea of the timeline but that is my reasoning.

Anyway, I'll end this for now and all the best to everybody.

luvchocolate

Some of the posters actually work for the Insolvency Service.....