In this article we discuss the bankruptcy procedure you would follow to make yourself bankrupt, the effects of a bankruptcy order, how your assets will be distributed amongst your creditors (the people you owe money to) during your bankruptcy, when you will be discharged from bankruptcy, and some alternatives to bankruptcy.

What is bankruptcy?

Bankruptcy is a process that can be used to deal with your insolvency. You will be insolvent if you can't pay your debts.

There are detailed rules but, in very 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 in proportion to what they are owed; and

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

Alternatives to bankruptcy

There are alternative procedures that could help you deal with your debts without being made bankrupt, such as:

• Informal agreement
• Debt Management Plan
• Individual voluntary arrangement (IVA)
• Administration order
• Debt relief order