Applying for bankruptcy (England & Wales)

Applying for bankruptcy (England & Wales)

In broad terms, the purpose of bankruptcy is:

(1) To ensure that your assets are collected in, sold and the net proceeds shared amongst all your creditors (i.e. the people you owe money to) in proportion to what they are owed; and

(2) To give you a fresh start, freed from the burden of your debts.

If you want to have yourself declared bankrupt you must use the online application procedure, whereas a creditor that wants to have you declared bankrupt has to apply to court by way of a bankruptcy petition.

When can you apply online?

You can only apply online for a bankruptcy order if on the day of the application you are unable to pay your debts. An adjudicator will consider the online application and will make the bankruptcy order if they're satisfied that all the requirements are met. The court is not involved in this process.

Will the adjudicator have jurisdiction to consider your application?

In England and Wales, you can only apply online for a bankruptcy order if your centre of main interest (COMI) is in:

  • the UK; or,
  • an EU member state and you have an establishment in the UK.

You can still apply online if neither of the above is true of you, and you:

  • are domiciled in England and Wales; or,
  • were ordinarily resident, had a place of residence or carried on business in England or Wales, at any time in the 3 years preceding the bankruptcy application.

Your COMI is in a particular place if it's clear to others that you regularly conduct the administration of your interest there. For a sole trader, this might be the place where they're seen to trade from; for a private individual it could be where they're seen to live or work. Under insolvency laws, it's further presumed, until proven otherwise, that your COMI is in:

  • your principal place of business (for sole traders); and
  • your place of your habitual residence (for private individuals). This broadly means the country you regularly live in.

What must be included in the application?

In the online bankruptcy application, you must give extensive prescribed information, including your name, contact and employment details, debts, liabilities and creditors. You must also provide details of your accountant, solicitor and any legal and insolvency proceedings you've been involved in.

You must confirm in the application:

  • that you're unable to pay your debts;
  • that you're applying for a bankruptcy order;
  • that you're not aware of any pending bankruptcy petitions against yourself;
  • whether any of the debts forming part of the current application is the subject of an existing bankruptcy order;
  • whether you got any debt advice before you completed the online application;
  • that you consent to verification checks being made by the adjudicator, in the electoral registers, in individual insolvency registers, with the official receiver and with a credit reference agency;
  • that you've paid the application fee and deposit in full; and
  • that the information you gave in the application is current and correct.

You must authenticate the application. You can do this by confirming your identity in a manner required by the adjudicator. If the adjudicator does not specify this, you can authenticate the application by including a statement of your identity that the adjudicator will not have any reason to doubt.

How much does it cost?

You will need to pay a fee and deposit to cover part of the costs of the Official Receiver for administering your bankrupt estate. The total cost is listed on the GOV.UK website. The payment can be made online either in a single payment or by instalments. The application will not be regarded as having been made unless payment has been made in full.

What is the application procedure?

The bankruptcy application must be made online, unless you have made specific arrangements with the adjudicator. The date of the application will be the date that the application is submitted to the adjudicator and it will be 'made' when the adjudicator acknowledges receipt of the application either electronically or in another way. However, an application will not be regarded as having been made unless the deposit and fees (see above) have been paid in full.

You may not withdraw your bankruptcy application. If you become able to pay your debts or a bankruptcy petition against you is presented to court before the adjudicator decides the application, you must inform the adjudicator.

How does the adjudicator decide the application?

An adjudicator has no discretion whether or not to grant a bankruptcy order. If the prescribed conditions are met, they must grant it; if not, they must reject it. The bankruptcy order will be granted if:

  • the adjudicator has jurisdiction to consider the application;
  • you are unable to pay your debts at the date the adjudicator determines the application;
  • no bankruptcy petition is pending for your bankruptcy; and
  • no bankruptcy order has been made regarding any of the debts listed in the application.

The adjudicator must decide within 28 days from the date that the bankruptcy application is made. If the adjudicator asks for more information from you after 14 days from when the application was made, the 28 days will be extended by 14 days. If the adjudicator fails to decide within this period it will be regarded as a refusal to make the bankruptcy order.

What happens if the application is refused?

The adjudicator will give you reasons if they refuse to make the bankruptcy order. You may request the adjudicator, within 14 days from delivery of the notice of refusal, to review the decision. The adjudicator can't consider any new information during the review process. If the adjudicator confirms the refusal you may appeal to court within 28 days from the date that the confirmation of the refusal was delivered to you.

What happens if the bankruptcy order is granted?

If the adjudicator makes the bankruptcy order you will be given a sealed copy of it. You can also access the order via the online system. Once the order is made it will be passed to the Official Receiver (OR) who will contact you to advise the next steps.

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