|If an individual is unable to pay his/her creditors in full and it is considered there are no other options available the individual can declare themselves bankrupt by following the statutory procedure. A creditor can present a bankruptcy petition against an individual debtor, which will be considered by the Court, but the creditor must be owed more than £5,000 and demonstrate that the debt is not disputed.
Bankruptcy normally lasts for 12 months, during that time certain restrictions will be applied such as applying for credit, unable to act as a director of a Company (without leave of the Court) and restrictions on the use of an existing trading name if a sole trader. If the individual is considered to have acted recklessly or continued to obtain further credit without any realistic prospect of repaying their debts, there are provisions which could see the period of Bankruptcy extended beyond 12 months and additional restrictions applied.
Bankruptcy should only be considered as the option of last resort.