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Both debtors and creditors can petition for the debtor to be made bankrupt.
The Debtors Petition
When a debtor decides to go bankrupt he must petition the county court for the insolvency district where he/she lives (High Court in London).
The debtor must pay the court fee and deposit towards the administration of the Order, currently £140 and £310 respectively. The court has some limited powers allowing it to waive the fee, but not the deposit.
Completing the debtors petition - Form 6.27
The petition is primarily designed with people who have been in business in mind. As these are the majority of people declaring bankruptcy.
The petition must be presented at the debtors local court with bankruptcy jurisdiction unless the petitioner has lived and/or traded in the area of another county court for most of the previous six months. It should be noted that not all county courts have bankruptcy jurisdiction.
Completing the Statement of Affairs - Form 6.28
An extensive amount of information is required on this form, much of which may not be readily to hand. Guidance notes are supplied with the form. However, they are not comprehensive, so the following should be noted.
Once completed, the debtor needs to take the forms (along with the fee and deposit) to be sworn.
On receipt the court will arrange for the matter to be put before a district judge. Many cases do not result in a hearing. However, should a hearing be arranged, the debtor will be expected to attend.
At the hearing the court will refer the case to an insolvency practitioner for consideration of an IVA if:
If an IVA isnt applicable, the court will either:
If a bankruptcy order is made, the procedure that follows is similar to bankruptcy under a creditors petition.
If an individual creditor is owed more than £750, they can petition for the debtor to be made bankrupt. Alternatively, creditors can join together to meet the £750 requirement.
Proceedings normally take place at the debtors local county court with bankruptcy jurisdiction. However, Crown departments (i.e. Inland Revenue, Customs & Excise) can use the High Court in London.
Creditors can only ask for someone to be made bankrupt if:
The debt can be payable immediately or at some time in the future.
This can be established only by them having a Statutory Demand served or by being unable to enforce a judgement debt by means of an execution against goods by a bailiff.
For example, if a Warrant of Execution was returned unsatisfied, because the debtor did not have sufficient goods which could be seized in payment of the debt, this could be seen as evidence that the debtor appears unable to pay his debts. And so the creditor could proceed to petition for the debtors bankruptcy.
The bailiff, however, must have made serious efforts to levy execution. The bailiff simply visiting the debtors property and reporting that he failed to gain access is not sufficient.
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