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As we know, an institution of personal bankruptcy unctions in most countries of the European Union. Let’s see now how it looks in England and Wales, because in Scotland the rules are different. And immediately at this point certain concepts due to language differences should be clarified. In English, there is a term „bankruptcy” and in the case of business failure we use the term „winding up”. Today I want to take care of the only personal bankruptcy of a legal person.

Let’s start from the application of provisions relating to bankruptcy in England and Wales, which are regulated by the Insolvency Act of 1986. In Scotland, as I mentioned earlier, bankruptcy procedure is completely different, there is also other application for bankruptcy.

When the time comes to report bankruptcy?

We become bankrupt at the moment, when we do not pay our debts, and we owe £ 5,000 (or more), we break the rules of the agreement with creditors to pay all or a portion of our debt:

  • Individual,
  • Voluntary Arrangement,
  • IVA, obliging us to make regular payments to the trustee. He, in turn, distributes the proceeds among the creditors, or when we entered into the IVA on the basis of false information.

And what should we do in the case of bankruptcy?

When we are in a state of bankruptcy, this fact will have significant impact on very important issues. Here it must be remembered that in the face of the bankruptcy, our assets may be used to pay debts. We are also in the automatic mode obliged to respect the limitations imposed on the bankrupt person. In addition, our data is published in the Individual Insolvency Register. (Individual Insolvency Register). Of course, as a bankrupt, we can still look for help, which we can get among other things from the National Debtline or even Citizen’s Advice.

How do I report bankruptcy of our company?

To declare bankruptcy, a word of bankrupt has become a key word for us in this case. First we must apply to the court for an order for its publication. To fulfill such a request, we have to go to the district court with jurisdiction over the place of residence. If here we use the assistance of a proxy, he may submit a request for us. But just in case, if the last 3 years we stayed in England and Wales, but we are now elsewhere.

Warning! ,, If you live in London, but you are indebted for £100,000, a bankruptcy petition must be filed in person at the Central London County Court. ”

If we are in debt over £100,000 and live in London, we are not English resident and we did not live or conduct business in England and Wales over the last 6 months and we are members of the partnership, which is in liquidation in the Court, or we are bound by the IVA – the request must then be filled in person at the office of the Supreme Court. When recognizing the request and the completion of the meeting, the Court will issue a decision on bankruptcy. Then our business has reached bankruptcy.

What is next for this bankruptcy?

Successively we will get a letter from the trustee, who will return it to us asking for information about the debt, creditors and income. It may also be that the trustee will also want to interview us personally – during which he will check the information held on our debts and probably ask for more details. He can also determine the cause of the bankruptcy, and answer any questions about the bankruptcy proceedings – here, let us remember that if you do not provide the necessary information, your exemption from bankruptcy may be delayed.

What to do to bankruptcy in England of our company has not led us to ruin?

In fact, the annulment of bankruptcy is possible at any time, but for this to happen, you have to meet one of the required conditions, namely: you have to pay off your debts in full, establish ties with the IVA or obtain information that adequate steps after bankruptcy were not taken. And that would mean that you are not bound by the restrictions of bankruptcy proceedings.

Here you should keep in mind that bankruptcy is not for human subjects especially indifferent, all our assets will be sold to settle our debts as a result of the bankruptcy proceedings. Furthermore, we are obliged to give them the rightful owner. We can, however, be in possession of the necessary elements for work – for example, tools, vehicles and household appliances. Regarding bank accounts, we are forced to pass the trustee credit cards, bank cards, checkbooks and so on.  And in this way our accounts will be frozen, with the possibility of releasing them to purchase necessities. But unfortunately, our house can also be sold if this is the only way to pay off debts. The same bankruptcy in England lasts around 12 months – after this period, we are released from the debt, regardless of the still remaining for settlement.

Are there any benefits of bankruptcy? And what are the disadvantages?

                The advantage of bankruptcy is that we can finally get rid of debt and freeze interest and any additional charges. Then, also actions vindication are stopped. Moreover, it happens also that part is sometimes canceled. Of course, bankruptcy does not have only advantages, because among defects we can mention a negative credit rating for a period of 6 years, or loss of property, as well as some limitations, eg. a bankrupt cannot be a director of a limited company.

So you should try to avoid such a situation that we cannot handle our debts.

Annual Individual Insolvency Statistics England & Wales 2015What should you do to avoid falling into debt that you cannot pay off:

  • Avoid credit cards
  • develop your professional skills to be able to quickly find a job in the event of sudden loss and continued repayments mortgage
  • If you must take a loan , you should compare different institutions (look for promotion) and social loans
  • generate surplus through wise management of your payment
  • spend money wisely and use discounts, cashback sites such, sales
  • annual car is not much different from that of the salon and is cheaper by 20% -30%
  • develop your financial intelligence by reading financial blogs and books and certainly do not fall into debt, which you will not be able to repay
  • lead the household budget, then you will avoid the debt that you cannot pay off
  • if you are going on a trip to an exotic country seriously consider a good health insurance that in case of sudden illness you would not have to take a loan
  • consider life insurance to protect family
  • plan your retirement to live peacefully

Are people in England get into debt?

The good news is that fewer and fewer people are falling into debt, which they cannot pay off. It also refers to a number of companies announcing insolvency. Perhaps this situation is influenced by the fact that the British economy is in a good shape. Also, unemployment is currently at a very low level.

Did you have a problem with unreliable company?

You might have seen an episode of cowboy builders on channel 5. If not, I strongly urge you to watch a few episodes. The program presents, people who have been deceived by the so-called. builders, who have not finished their work and earlier they took the pledge to start construction work and how it happens in real life they did not finish it and they announced insolvency or simply closed the company. Most of these companies are notorious Ltd which is a limited liability. See below the chart and on the first position are companies from this sector.

Total new company Insolvencies in England and Wales by broad Industry sector

Finally, it should be strongly emphasized that the ddeclaration of bankruptcy is a serious, but often the only possible decision, but we cannot always take advantage of this option. The collapse of the consumer does not relate to debts arising from alimony, fines, secured loans and student loans.

NOTE: I present private opinions and I am not responsible for the readers’ decisions. I always try to present current information but may no longer be up to date. Therefore, before making a decision, please verify them and consult a licensed financial adviser.


Hey! Nazywam się Radek i na codzień ciężko pracuję w Anglii i myśl, że na emeryturę będę mógł przejść dopiero po 68 latach nie jest mi na rękę. Dlatego udowodnię, że jest to możliwe w wieku 55 lat a może i wcześniej. Zobacz na tym blogu jak chcę to osiągnąć.


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