Zombie firms apocalypse facing the Scottish economy
October 21, 2021
Although being declared bankrupt will always carry some stigma, for many people struggling with personal debt it will be the best way forward and more appropriate for their financial circumstances than an Individual Voluntary Arrangement or debt management plan.
For individuals battling with intolerable personal debts, Bankruptcy can be the best to secure a debt-free future. It is a court-based procedure, where the debtor can either petition to be declared Bankrupt or have it forced on them by a creditor. A Trustee takes control of the assets and will sell them to pay off as much of the overall debt as possible. The Trustee has extensive powers of investigation so trying to hide assets can have disastrous consequences, including bans from running businesses in future or even in the most extreme cases a jail sentence.
Bankruptcy can be a straightforward way to reset the debtor’s financial affairs and in most instances all debts and liabilities are written off when the Bankrupt is discharged after just 12 months or sometimes even sooner. Debtors can declare themselves Bankrupt by filing what is known as a Debtor’s Petition if they are prepared to admit that they cannot repay their debts. Alternatively a creditor can file a Bankruptcy Petition if they are owed more than £5,000. In either case, the Court will then make a Bankruptcy Order.
Bankrupt individuals are under a legal duty to assist the Trustee in all respects. A Trustee has up to three years from the date of the Bankruptcy Order to realise any interest in the property in which the bankrupt lives and sell any other assets. If the Bankrupt has any surplus income, they can be ordered to make payments out of their income to the Trustee for the benefit of the creditors for a period of three years.
Where the behaviour of the Bankrupt justifies it, the Official Receiver can obtain a Bankruptcy Restriction Order or a voluntary undertaking from them which can last between two and fifteen years. The Bankrupt will be subject to a variety of restrictions, most commonly they are not allowed to take part in the management of a business during that period.
For more information on personal debt and Bankruptcy, we offer an initial free consultation to review the situation and make recommendations on the best way forward. If we think that Bankruptcy is the best route forward, our specialists can support the individual at every step of the way through the process.
Contact our Head Office on +44 (0) 20 3326 6454 to arrange a no obligation and confidential call with one of our Partners.
“Our firm has worked with Opus for many years and with one of the partners in particular, Jo Rolls. I have attended a number of meetings with Jo when our clients have needed guidance on restructuring their business at a time when they have been facing financial challenges. Jo has always demonstrated a clear understanding of the clients’ needs from the outset. Her attention to details and diligent advice have proved invaluable to the business at a time when the directors needed it most. I would have no hesitation in recommending Opus to anyone wishing to use their services”