The bankruptcy act is legislation within the UK, it is often the last step taken by individuals after they have exhausted other methods of attempting to secure their finances. The act is a legal process that allows an individual to eliminate their debts with the minimum effort. It is possible for any individual or organisation to file for bankruptcy.
Going bankrupt is often a very big decision for an individual or organisation to take, it can have serious implications on the future financial history of those involved. The procedures are extensively legal and therefore legal assistance is often required in order to become bankrupt. The act has been created in order to help and benefit the people and companies that are unable to make further payments to creditors that they though due to financial issues. How these issues have arisen is often irrelevant although they often include situations such as divorce, accident, injury, illness and demotion.
The bankruptcy act contains several chapters that have been created in order to cater for the individual person and their circumstances. A company or debtor must consider each chapter within the act before going bankrupt, failure to do so can make the case weak. In order to go bankrupt the courts must make a ruling, this is why it is important to gain the assistance of a legal team before doing so. The selection of the wrong chapter from the act can result in the case being thrown out of the courts.
Legally the bankruptcy act means that bankruptcy is the legally declared failure or mutilation of ability of an individual or organisation to pay the creditors that it owes.
People or organisation that wish to go bankrupt should be fully aware of the process and how it will happen, it is often stretched over a year that an individual or organisation will become bankrupt. Once a bankruptcy period has come to an end the majority of debts are written off but this may mean that obtaining credit and working in certain professions also becomes unlawful. The courts appoint an Official Receiver who will be in charge of protecting the assets of the individual or organisation involved, they will also investigate the cause of the bankruptcy.
The Official Receiever will be in the legal position to sell off any assets that are owned by an individual, this includes the home, car and household assets that are owned. Occupations that an individual will be excluded from include the police force, the army, local council and government offices.
The chances of securing future finance is very unlucky and individuals who wish to operate as directors of businesses may not be able to, or may have their activities monitored.