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Dealing with a bankruptcy petition


If a bankruptcy petition has been issued against you, there are a number of legal rules that need to be considered when deciding how to respond to this.

Effect of the bankruptcy petition

The issue of the bankruptcy petition against you has the following consequences:

  • The court notifies the Chief Land Registrar that the petition has been issued. This means that your name will be added to the bankruptcy register as a pending action. Other creditors could become aware of this and your bank account could be frozen.
  • Any transaction that you enter into will be void if you are made bankrupt, unless this is approved by the trustee in bankruptcy or the court. This can have serious implications if you are running your own business or are about to sell a property or other asset.
  • The petition cannot be withdrawn without the permission of the court at the hearing. This can make it difficult to pay off the petitioner, if you have other creditors who become aware of the petition.
Deciding what to do

There are a number of options

  • If you do not accept that you owe the money, you may want to challenge the petition.
  • You may be able to come to an agreement with the petitioner to pay the debt.
  • If you have other debts, you may be able to enter into an arrangement with all of them.
  • You may decide to accept bankruptcy as the only or best option.
Challenging the petition

If you intend to oppose the petition, you are required by the rules to file with the court a notice of the grounds of objection and send this to the petitioner.  This must be done 5 business days before the hearing.  If you do not file this notice, there is a risk that the court will not give full consideration to your grounds of challenge.  You may challenge the petition on the same grounds as a statutory demand – Challenging a Statutory Demand – and there may be other points that the court will be willing to take into account at this stage.


Taking legal advice

The consequences of being made bankrupt are potentially very serious.  You and your family may lose your home. You may lose your business. You may have to stop being a director of a company. You will be subject to restrictions as to what you can do during bankruptcy and your credit rating may be badly affected in the future.  However, for some people bankruptcy may be the best way out of their financial problems. If you are in business or in the middle of a property transaction you may need to apply to the court for an order allowing you to carry on with these things without the risk that they will subsequently be undone. If you want to propose an arrangement to all of your creditors with a view to avoiding bankruptcy, you will need the assistance of an insolvency practitioner. If there are grounds on which to challenge the bankruptcy petition, you should take legal advice on this at an early stage so that your prospects of success can be assessed and, if necessary, other options can be considered in the time available. It will be apparent from what we say above that there are many legal issues that arise when a bankruptcy petition is issued and taking legal advice may be essential in order to protect you and your family from the potentially serious consequences of this.  This can include:

  • Advising on whether you need to apply to court to validate transactions prior to the hearing of the bankruptcy petition
  • Advising on whether there is a genuine dispute on substantial grounds
  • Advising on whether you have a counterclaim, cross-demand or set-off that is equal to or exceeds the debt
  • Ensuring that the documents are properly prepared and issued in time
  • Corresponding with the creditor and their solicitors
  • Preparing your legal arguments
  • Representing you before the court.

Our solicitors are happy to advise on these and other legal issues in connection with the presentation of a bankruptcy petition against you. For more information proceed to Issuing a bankruptcy petition

For more information, please contact our team of experts by emailing insolvency@bankruptcy-solicitors.com or call 020 8308 3610 today.

Meet the Dealing with a bankruptcy petition team