Anyone can become a bankrupt. It used to be that mainly companies declared themselves bankrupt but now it's individuals. Whether they have been careless with their financial affairs particularly credit cards and loans or had a spot of misfortune or bad luck it means someone can't pay their debts and creditors are owed money. Bankruptcy is an option that is considered when an individual cannot pay their debts as they fall due. For a first time bankruptcy within a 15 year period, for debts under £20,000, the procedure is known as a Summary Administration and you may be discharged after two years. A first time bankrupt with debts over £20,000 may be discharged after three years. Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases. A court makes a bankruptcy order only after a bankruptcy petition has been presented - either by you (debtor's petition) or creditors who are owed at least £750 by you (creditors' petition) - and can be made even if you refuse to acknowledge or agree to the order.

So, once the bankruptcy proceedings have begun, it's in your best interest to co-operate fully. Even if you dispute the creditors' claims you should try to reach a settlement before the bankruptcy order is made. If you want to make yourself bankrupt you should contact your local court to obtain the contact details of the nearest county court dealing with bankruptcy. Ironically, you'll have to pay a fee to the court.

The bankruptcy proceedings:-
Free you from overwhelming debts so you can make a fresh start, subject to some restrictions.
Make sure your assets are shared out fairly among your creditors.

How are you made bankrupt?
An individual can be made bankrupt either in one of three ways.
Voluntarily - By the debtor themselves.
Involuntarily - By the creditor owed money (£750 Minimum).
The supervisor or anyone bound by an IVA

What are the advantages of bankruptcy?
For the person involved, bankruptcy provides relative peace of mind and possible automatic discharge after two or three years.
For the creditors, bankruptcy allows a full investigation of the debtor's affairs to be carried out.

What are the implications of bankruptcy?
You cannot obtain credit for over £250 without the permission from the lender.
You cannot act as a company director.
You cannot take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court.
You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
You lose control of your assets.
You may not practice as a Charted Accountant / Lawyer
You may not act as a Justice of the peace (JP)
You may not become an member of parliament
You may not become a member of a local authority.
Your credit is affected for many years after the annulment.
You may be publicly examined in court.
A bankruptcy order can still be made even if you refuse to acknowledge the proceedings or refuse to agree to them. You should therefore co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditor's claim, you should try and reach a settlement before the bankruptcy petition is due to be heard. Trying to do so after the bankruptcy order is made is both difficult and expensive.
A court makes a bankruptcy order only after a bankruptcy petition has been presented - either by you (debtor's petition) or creditors who are owed at least £750 by you (creditors' petition) - and can be made even if you refuse to acknowledge or agree to the order.
So, once the bankruptcy proceedings have begun, it's in your best interest to co-operate fully. Even if you dispute the creditors' claims you should try to reach a settlement before the bankruptcy order is made.
If you want to make yourself bankrupt you should contact your local court to obtain the contact details of the nearest county court dealing with bankruptcy. Ironically, you'll have to pay a fee to the court.
The Official Receiver is a civil servant and the officer of the court responsible for administering bankruptcies. One of the Official Receiver's main duties is to investigate your financial affairs for the period before and during your bankruptcy.
They may report to the court - and he has to report to your creditors. If he considers that you've committed criminal offences in connection with your bankruptcy, the police will get called in.
You'll have to provide a full list of your assets and what you owe. Then you hand over these assets to the Official Receiver, along with all your financial records, bank statements and property.
The Receiver then puts an immediate block on your bank, building society and similar accounts. And if you try to obtain further credit, you'll be committing a criminal offence.
The Official Receiver informs your creditors that you're a bankrupt and tells them how much money will be shared out in the bankruptcy.

The costs of the bankruptcy proceedings, including any fees owed to the Official Receiver, are paid first from the money made available by the sale of your assets. Creditors then have to make their formal claims by a certain date.
If you own your own home, it will almost certainly have to be sold to go towards paying your debts. However, your husband or wife, whether or not a joint owner, may be able to put the sale off for up to a year.
If you rent, although the Official Receiver has no powers to repossess, he'll inform your landlord that you're bankrupt.
Once bankrupt, it's a criminal offence for you to obtain credit of £250 or more, either alone or with another person, without disclosing your bankruptcy.
Generally you'll be automatically freed from bankruptcy (known as 'discharged') after three years, but new legislation could mean this takes as little as six months.
Debts discharge releases you from most of the debts you owed at the date of the bankruptcy order. Exceptions include debts arising from fraud, certain crimes and fines.
If that sound like a honeymoon to you, then apply to the court. However, if an utter chancer like Jeffrey Archer fought a huge battle to prevent his creditors from forcing him into bankruptcy, that must tell you something about life as a discharged bankrupt.