Make someone who owes you money bankrupt

Before you take any action to petition to make someone bankrupt, you should get your own legal or financial advice about bankruptcy and the other options available to you.

One source of information is The Insolvency Service, which is the government agency responsible for dealing with financial failure and misconduct. The agency provides general information on insolvency issues, administers and investigates the affairs of bankrupt individuals, partnerships and companies wound up by the courts through its network of official receiver offices throughout England and Wales.

The Insolvency Service and the courts cannot advise you on specific insolvency problems, for example whether you should make someone bankrupt or whether you should look at alternatives. You can get advice from your local Citizens Advice Bureau, a solicitor, a qualified accountant, an authorised insolvency practitioner, a reputable financial adviser, or a debt advice centre.

This guide explains the process of making someone bankrupt who owes you or your business money and what happens after the bankruptcy order is made.

The guide gives an overview of the topic and you may also want to read the relevant legislation in the Insolvency Act 1986 and the Insolvency Rules 1986 as amended.

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The bankruptcy order process

The court can make a bankruptcy order against an individual who fails to pay their debts. A bankruptcy order makes sure that the assets of the bankrupt are shared out fairly among the creditors and imposes certain restrictions on the bankrupt. Bankruptcy does not necessarily mean that the bankrupt’s debts will be paid.

How is a bankruptcy order made?

To begin the process of getting a bankruptcy order made against someone who owes you money, you apply to your local county court using a bankruptcy petition. A bankruptcy petition is usually presented by a creditor on the grounds that the debtor cannot pay their debts. A bankruptcy petition can also be presented by either the debtor or, if the debtor has already made a voluntary arrangement to deal with the debt, by the supervisor of this arrangement.

The court will regard someone as being unable to pay their debts if either of the following occurs:

• A creditor who is owed more than £750 serves a ‘statutory demand’ for the money due and it is not paid or secured (for example, by a guarantee to provide something else of the same value); or a settlement is not agreed, within 21 days, and the debtor has not applied for the statutory demand to be set aside.
• A creditor who is owed more than £750 obtains judgment against the individual, and an execution is ‘unsatisfied’, ie the sheriff or bailiff was unable to seize enough assets to clear the debt. You can get the forms to issue a claim for judgment from your local county court. Court fees depend on the amount of the claim, and range from £35 to £1,670 – the court can tell you the precise court fee payable for a particular claim.

You can get the forms for a statutory demand from your local county court or a legal stationer:

• form 6.1 – to be used for a debt of a specific amount which is payable now
• form 6.2 – to be used for a debt of a specific amount which is payable now, following a judgment or order of court
• form 6.3 – to be used for a debt that is payable in the future

Download form 6.1 from the Insolvency Service website (DOC, 49K) – Opens in a new window.

Download form 6.2 from the Insolvency Service website (DOC, 48K) – Opens in a new window.

Download form 6.3 from the Insolvency Service website (DOC, 49K) – Opens in a new window.

Once completed, a statutory demand must usually be served on – ie given to – the individual in person. The creditor must have proof of service, so it is usual to employ a process server to carry out this function – these are listed in Yellow Pages under ‘detective agencies’. The court is not involved in the issuing of statutory demands, so no court fee is payable.

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Courts that deal with bankruptcy petitions

Not all courts can deal with bankruptcy. Generally, you should present the petition for bankruptcy to the court that deals with the area where the debtor has lived or traded for the longest period in the previous six months. If the debtor lives in one court district and runs a business in another, you should go to the court dealing with the district where the business is, as this takes priority over the home address.

If you are not sure which court you should go to, please phone your nearest county court for advice.

The address and phone number of your local county court are listed under ‘Courts’ in the phone book. Look for ‘civil courts – county courts’ and not magistrates’ courts. You will need to contact the court to find out if it has jurisdiction (authority) to hear a bankruptcy case. The HM Courts & Tribunals Service (HMC&TS) website has a list of county courts with bankruptcy jurisdiction and an index that shows the geographical area they cover.

Find a court on the Directgov website – Opens in a new window.

Court costs for bankruptcy petitions

There can be a number of costs associated with using the courts in bankruptcy petitions:

• a petition deposit of £700 towards the costs of administration of the bankruptcy – this is a one-off payment towards the costs of the bankruptcy and if the bankruptcy has enough assets, the petition deposit will be refunded to you
• a court fee of £220
• any costs for instructing a solicitor

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Presenting a bankruptcy petition

As the petitioner – the person seeking to make someone bankrupt – you must complete a bankruptcy petition. You should use:

• Form 6.7 – creditor’s bankruptcy petition on failure to comply with a statutory demand if you have issued a statutory demand but the debtor has not complied with it. You can download form 6.7 from the Insolvency Service website (DOC, 46K) – Opens in a new window.
• Form 6.9 – creditor’s bankruptcy petition where execution or other process on a judgment has been returned unsatisfied in whole or part if a sheriff or bailiff acting on a court judgment has been unable to seize enough assets to clear the debt. You can download form 6.9 from the Insolvency Service website (DOC, 56K) – Opens in a new window.

You will need three copies to take to the court, whether you have completed them by hand or filled them in online and printed them.

You must also complete a witness statement (form 6.13A) confirming that the statements in the petition are true. If a statutory demand has been issued, you must complete a further witness statement verifying that the statutory demand has been served (form 6.11).

If a statutory demand has not been served personally, you will have to obtain permission from the court to issue the petition. To do so you need to complete a witness statement confirming compliance with Insolvency Practice Direction 11. This statement must be factually accurate and describe fully how the statutory demand was served and any enquiries that were carried out before, or at the time of service.

The original petition and two further copies, as well as the original documents referred to above are filed (handed in) at court and three copies made for the following purposes:

• one to be served on the debtor
• one to be attached to the statement of truth (form 6.13A) verifying the matters that led to the petition
• one to be attached to the petition

A deposit and court fee is payable on presentation of the petition (see below). The court then fixes the place and date when the petition will be heard. Normally there must be at least 14 calendar days between the petition being served on the debtor and it being heard in court.

Serving the petition

A copy of the petition must be served on (given to) the debtor in person. If this is not possible the court can, on application, order that the petition be served on the debtor by alternative means, such as by post. This is known as ‘substituted service’. A copy must also be served on any supervisor of a voluntary arrangement. A certificate of service of the petition must be filed in court as soon as reasonably practicable after service, and in any event not less than five business days before the petition is heard (form 6.17 or 6.18).

If the debtor wishes to oppose the petition, they must give the court a notice (form 6.19) at least five business days before the hearing. They will also need to send a copy of the notice to the petitioner at least five business days before the hearing.

The bankruptcy hearing

On the day of the hearing, you must prepare a list of people intending to appear at the hearing for the court, using form 6.21.

At the hearing, you (the petitioner), other creditors (who will have informed you they intend to appear), the debtor and any supervisor of any voluntary arrangement all have the right to be heard.

The court can then:

• stay (delay or stop) the proceedings
• dismiss the petition
• adjourn (postpone) the hearing
• make a bankruptcy order – see the page in this guide what happens after someone is declared bankrupt

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What happens after someone is declared bankrupt

After making a bankruptcy order, the court usually appoints the official receiver (OR). The OR is both an officer of the court and a civil servant from The Insolvency Service, the government agency responsible for dealing with financial failure and misconduct. The court appoints the OR to be receiver and manager of the bankrupt’s affairs. The OR has responsibility from the date of the bankruptcy for administering the bankruptcy and protecting the bankrupt’s assets.

The OR will also act as trustee of the bankruptcy estate unless an insolvency practitioner is appointed. If this happens, the OR still has a duty to investigate the bankrupt’s affairs. So two people may be involved in the bankruptcy:

• the trustee, who is responsible for selling the bankrupt’s assets and distributing the money among the creditors
• the OR, who has a duty to investigate the bankrupt’s affairs

Certain restrictions and duties are imposed on a bankrupt – you can read more about this in our guide on the effects of bankruptcy.

Can anyone appeal against or stop the bankruptcy?

The court may ‘annul‘ (cancel) a bankruptcy order. The bankrupt (and anyone else) can apply for an order to be annulled if:

• the court did not have all the relevant facts when making the bankruptcy order and would not have made an order had it known those facts
• the bankrupt can pay all the debts in full
• the bankrupt enters into a voluntary arrangement with the creditors

An application to annul the bankruptcy order can be made at any time (even after the bankrupt’s discharge). For further information about annulment of the bankruptcy order, see our guide on ending bankruptcy: discharge, early discharge and annulment.

The bankrupt can apply for the ‘rescission‘ (cancellation) of the bankruptcy order, if there has been a change in circumstances since the bankruptcy order was made. A rescission will usually only be granted in exceptional circumstances and normally requires the consent of the petitioning creditor.

The bankrupt can ‘appeal‘ against a bankruptcy order on a point of law. As a result of an appeal, the court can cancel the bankruptcy order or otherwise change its decision. The bankrupt should appeal within four weeks of the order being made.

Bankruptcy proceedings can be ‘stayed‘ (stopped). The bankruptcy proceedings are usually only stayed while waiting for an application for an annulment, an appeal or a rescission of the bankruptcy order, or while an individual voluntary arrangement is being proposed.

Once someone has been declared bankrupt by the courts their name will appear on the Individual Insolvency Register. Their name will remain on the register until three months after the date of their discharge – the day their bankruptcy ends. The register is maintained by The Insolvency Service.

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