If you have tried to obtain payment of your debt without success you may decide to issue a bankruptcy petition against the debtor and serve this on them.
The consequences of issuing a bankruptcy petition
The issue of a bankruptcy petition has legal consequences for the debtor. The debtor is prohibited from disposing of any assets (including paying debts) apart from in certain limited circumstances or where ratified by the court. Although a bankruptcy petition is not advertised, other creditors including the bank may come to hear about it. The bank account might be frozen and, if the debtor is a sole trader, other creditors may stop supplying him with goods and services. This can be counter-productive from the point of view of getting the debt paid and sometimes a tactical decision has to be made as to whether issuing a bankruptcy petition is the right thing to do.
Issuing a bankruptcy petition against a debtor
To issue a bankruptcy petition against a debtor the following must be done
- The bankruptcy petition must include prescribed information as provided by rules 10.7, 10.8 and 10.9 of the Insolvency Rules 2016 regarding a creditor’s petition.
- A search must be carried out to see whether any other petitions have been issued against the debtor and a certificate to this effect must be endorsed on the petition.
- The petition must be verified by a Statement of Truth
- The petition must be sent to the correct court with the correct number of copies and it must be accompanied by the Official Receiver’s deposit (£990) and the court fee (£280)
- Where the petition is based on non-compliance with a statutory demand, details of how the debt arose must be identified including details of the failure to comply with the statutory demand, and details of how and when the demand was served, must also be included.
- The bankruptcy petition will be stamped with the court seal and given a hearing date.
- The court will notify the Land Charges Department that the petition has been issued and this will be added to the public register
- The court will send you the issued documents for service on the debtor.
Serving the bankruptcy petition
A bankruptcy petition must be served personally on the debtor at least 14 days before the date of the hearing. If prompt personal service cannot be effected because the debtor is keeping out of the way or for some other reason, you can apply to the court for an order for substituted service (which may be by posting or leaving the document at a given address or by advertisement). A certificate of service must be filed with the court as soon as practical after service and in any event 5 business days before the hearing.
Taking legal advice
There can be a number of legal issues that need to be tackled when preparing, issuing and serving a bankruptcy petition including:
- Is the bankruptcy petition correctly completed?
- Which court should it be sent to?
- How many times should you attempt personal service of the bankruptcy petition?
- Where should this be done?
- How do you make an application for substituted service?
- How do you prepare for the hearing?
Our solicitors are happy to advise on these and other legal issues in connection with making someone bankrupt.
For more information proceed to Dealing with a bankruptcy petition