In broad terms, the purpose of bankruptcy is:

(1) to ensure that a debtor's assets are collected in, sold and the net proceeds shared amongst all the debtor's creditors (i.e. the people the bankrupt owes money to) in proportion to what they are owed; and

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

A debtor who wants to have themselves declared bankrupt needs to use the online application procedure, whereas a creditor that wants to get a debtor declared bankrupt has to apply to court by way of a bankruptcy petition.

Apply online

The debtor can only apply for bankruptcy online for a bankruptcy order if on the day of the application they are unable to pay their 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.

Jurisdiction

The Recast EC Insolvency Regulation on insolvency aims to improve the efficiency of insolvency proceedings where there is a cross-border element by giving prominence to insolvency proceedings started in the EU member state where the debtor has its centre of main interest (COMI). These proceedings are called main proceedings and are effective regarding all the assets and creditors of the insolvent individual wherever situated (except for some restrictions applicable to territories where non-main proceedings have already been started). If there are insolvency proceedings against the same debtor in other EU states, where the debtor does not have their COMI, those will only have local effect. COMI is not defined within the regulations but in principle will be:

• for professionals - the place of their professional domicile; and
• for natural persons - the place of their habitual residence.

The debtor can only apply online for a bankruptcy order if their COMI is in England or Wales. If this is not the case and their COMI is not in a member state of the EU that has adopted the Recast EC Insolvency Regulation, they will still be able to apply online if:

• they are domiciled in England and Wales; or,
• they 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.

Contents of the application

In the online bankruptcy application, the debtor must give extensive prescribed information including, their name, contact and employment details, their debts, liabilities and creditors. The debtor also has to provide details of their accountant, solicitor and any legal and insolvency proceedings they've been involved in.

The debtor must confirm in the application that:

• that they're unable to pay their debts;
• that they're applying for a bankruptcy order;
• that they're not aware of any pending bankruptcy petitions against themselves;
• whether any of the debts forming part of the current application is the subject of an existing bankruptcy order;
• whether debt advice was obtained before they completed the online application;
• that they 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 the application fee and the deposit have been paid in full; and
• that the information given in the application is current and correct.

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

The application fee and deposit

The debtor will need to pay a fee and deposit to cover part of the costs of the Official Receiver for administering the bankrupt estate. The total cost is listed on the gov.uk site. 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.

Application procedure

The bankruptcy application must be made electronically unless the debtor has 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. The application however cannot be submitted if the deposit and fees have not been paid in full.

A bankruptcy application may not be withdrawn. If the debtor becomes able to pay their debts or a bankruptcy petition against them is presented to court before the adjudicator decides the application, they must inform the adjudicator.

Adjudicator's decision

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;
• the debtor is unable to pay their debts at the date the adjudicator determines the application;
• no bankruptcy petition is pending against the debtor; 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 the debtor 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.

If the application is refused

The adjudicator will give reasons for refusing to make the bankruptcy order. The debtor 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 such review process. If the adjudicator confirms the refusal the debtor may appeal to court within 28 days from the date that the confirmation of the refusal was delivered to the debtor.

If the bankruptcy order is granted

If the adjudicator makes the bankruptcy order the bankrupt will be given a sealed copy of it. The bankrupt 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 the bankrupt to advise the next steps.