Bankruptcy (sequestration)

How the process starts

For a debtor application, an approved money adviser or insolvency practitioner assesses the finances and submits the application to Accountant in Bankruptcy. A creditor petition follows a separate court route. A person cannot assume the England and Wales online bankruptcy application applies in Scotland.

The assessment includes debts, assets, income, essential expenditure and the legal basis for insolvency. It should also consider alternatives such as DAS or a protected trust deed. A statutory certificate and apparent-insolvency rules may be relevant; the adviser determines the applicable route.

The trustee and the estate

Accountant in Bankruptcy or an insolvency practitioner acts as trustee. The trustee identifies assets, establishes claims and considers realisations and recoveries. A home interest can be at risk; necessary items receive statutory protection, but the exact exemptions need checking.

The individual must provide records, cooperate and report relevant changes. The trustee assesses disposable income using the prescribed framework. A debtor contribution order can require payments, and a later change in circumstances may need review.

Practical consequences

Bankruptcy can affect bank accounts, credit, employment and professional roles. Restrictions apply to matters such as company involvement, credit and trading names. A sole trader’s debts are personal debts, while a limited company remains a distinct legal person.

Not every liability is released, and security or claims against another borrower or guarantor do not automatically fall away. The individual should plan for current rent, utilities and other ongoing commitments alongside the bankruptcy.

Discharge is one milestone

In full administration, discharge is normally after one year, but cooperation and the statutory conditions matter. Contributions commonly run over four years, and asset administration may continue after discharge. There is therefore no single end date for every effect of bankruptcy.

MAP has its own shorter discharge route where the conditions remain satisfied. Conduct restrictions, public registration, trustee completion and credit-file effects are separate issues. Recall is the distinct route for cancelling an award when the legal conditions are met.

The process, at a glance

1. Money advice and assessment. Identify the correct route and compare realistic alternatives.Process stage — practical timing varies
2. Application or creditor petition. A debtor application goes to AiB through an adviser; creditor proceedings use the relevant court route.Process stage — practical timing varies
3. Award and trustee. The trustee establishes the estate, creditor claims and financial position.Process stage — practical timing varies
4. Assets and contributions. The trustee administers property and the contribution order; the individual cooperates.Process stage — practical timing varies
5. Usual full-administration discharge. Discharge can precede the end of contributions and estate administration.Process stage — practical timing varies
6. Trustee completes. Final realisations, claims and distribution matters are resolved.Process stage — practical timing varies