bankruptcyinstruction

The Bankruptcy Act was first instituted in 1571. Originally, only traders and craftsmen could be declared bankrupt; everyone else would be imprisoned if they didn’t pay their debts. As you would imagine, this meant that everyone in financial difficulties tried to qualify as traders in order to avoid the debtors’ prison! This situation was revised in 1861, when all insolvent debtors were allowed to petition for bankruptcy. This arrangement has been standing ever since, meaning that today anyone in a position of insolvency can declare themselves bankrupt.

In April 2004 a number of changes were made to bankruptcy law in the much-publicised ‘Enterprise Act’. One effect of this was that the duration of bankruptcy has been reduced. Prior to the amendments, bankrupts would be discharged after two or three years; now they are discharged after only twelve months. In addition, the time allowed for the Court to realise assets for creditors has now been limited to 3 years.

Bankruptcy can be forced upon you by creditors who are owed a minimum of £750, if you have repeatedly defaulted on your payments to them. It can also be forced upon you if you undertake an IVA and then fail to make the monthly payments. However, you can also choose to declare yourself bankrupt voluntarily, which many people feel allows them a certain degree of dignity.

Referred from: (http://www.bankruptcyhelp.org.uk/)