Personal Bankruptcy

Personal Bankruptcy is for individuals who are insolvent and are unable to pay their personal debts when they have fallen due for payment. Personal Bankruptcy is not for companies as the business equivalent of a bankruptcy is liquidation.

Personal bankruptcy arises when an individual acquires personal debt and then cannot pay that debt as it falls due. Personal debt can be for any reason but will include:

• Credit cards
• Store card debt
• Personal loans
• Hire Purchase
• Home Loans
• Business debt (where a director has become personally liable)

Personal Bankruptcy is the last resort for individuals who cannot pay their debts and should only be considered after considering all available options.

There are many options for individuals who cannot pay their debts and a list of several options are provided below.

The options listed are not exhaustive and you should always obtain the appropriate professional advice before filing for personal bankruptcy:

• A Debt Agreement
• A Personal Insolvency Agreement
• Debt Management

In most cases a bankruptcy will last for 3 years, however, in specific cases it can be extended for up to 5 or even 8 years if the trustee applies for an extension if they believe you have not been co-operative. Bankruptcy should be the last option for individuals as it  is the most severe option. It will have a lasting effect on your ability to obtain personal credit following bankruptcy.

Personal Bankruptcy is recorded on most credit reporting database for a period of 7 years. During your actual bankruptcy period you will be required by the trustee to pay part of your income as determined by the Bankruptcy Act to the Trustee. This is for the purpose of paying your creditors and can be anything in excess of unemployment benefits.

You should also remember that while you may bankrupt yourself by filing a debtors petition, your creditors may also initiate bankruptcy proceedings by filing a creditors petition.