Bankruptcy laws come into force to give debtors relief from the burden of credits
. In United Kingdom the process is governed by the lX part 1986 insolvency act and insolvency rules. Only individuals are allowed to apply for this act not the companies and legal entities. A person can declare himself bankrupt only by the court order following by the presentation of his petition. Here he need to laid down the points to show his insolvency i.e., not capable of paying for debts.
Creditors can also file the petition for bankruptcy order against an individual debtor. Creditor however, is required to present a summoned or made statutory demand to the debtor by offering him 21 days to pay for the claim before filing for bankruptcy petition. The debtor may refer to the court to aside the bona fide demand on the debt issue or could counterclaim to set off the exceed debt demand by the creditor. If the debtor is failed to clear the claim or his application denied by the court the creditor gets the right to present the bankruptcy petition. In any case debtor is owed to pay a set amount of 750 on the court order with or without liquidation of assets to fix the creditor damage.
While filing for petition under bankruptcy laws, an insolvency practitioner is appointed. He is generally put forward by the creditors in the cases of consumer credit cards debts such as loans and credit card. Just like an IVA, the appointed official goes through the facts. This rigorous process requires both creditor and debtor presence in meetings where information and evidence about owing or transfer of the resources come into light.
To find out the actual financial position of the debtor and to balance the demand of the creditor is the main agenda of such conference. The maximum bankruptcy period is usually of 36 months and least is of 12 months depending on the mitigating circumstances. The debtor is required to pay for the lump sum amount by releasing the sale of his assets that can be home or car or by contributing a part of his monthly income.