Bankruptcy can only apply to individuals -
including sole traders and individual members of a partnership. Bankruptcy petitions may be presented to the court:

1. By the individual himself (known as a debtor's petition)
2. By creditor(s) who are owed £750, or more, or
3. By the supervisor of an individual voluntary arrangement (where the individual has not complied with the terms of the arrangement).

Official Receiver and Trustee-in-Bankruptcy (“trustee”)

The Official Receiver normally acts as receiver and manager of the bankrupt's estate and will become trustee unless an insolvency practitioner is appointed to act as trustee. An insolvency practitioner is usually appointed where there are significant assets.

The Bankrupt's estate

The trustee realises (i.e. sells) all available assets which are included in the bankrupt's estate. This normally includes the bankrupts’ house. Certain assets are excluded from the estate.

Payment to creditors

After the payment of bankruptcy fees and costs, the trustee distributes the remaining funds to the creditors in a strict order of priority.

Duration of bankruptcy

The period of bankruptcy is normally - although not always - 1 year.

1. Relative peace of mind and relief (in right circumstances).
   
   
2. No payment obligations carried forward (subject to Income Payment Order or Arrangement which is quite common).
   
   
3. Debt slate wiped.

1. The debtor’s entire estate is vested in the trustee-in-bankruptcy. The debtor loses control of his assets, except for certain assets.
   
   
2. The bankrupt has significant restrictions on obtaining post bankruptcy credit.
   
   
3. An undischarged bankrupt is prohibited from acting as a director or being a partner in a partnership.
   
   
4. An undischarged bankrupt has severe restrictions on sole tradership.
   
   
5. There are miscellaneous professional and career restrictions. An undischarged bankrupt may be restricted from acting in his chosen profession or may have restrictions on his career.
   
   
6. An undischarged bankrupt is potentially liable for bankruptcy offences. Furthermore, the bankrupt has a duty to co-operate with the trustee-in-bankruptcy and/or the official Receiver.
   
   
7. It may be hard to obtain credit when the bankrupt is discharged. All bankruptcies are registered by the credit referencing agencies for quite some time after the bankrupt is discharged. Therefore, the “mark” of bankruptcy may stop a discharged bankrupt obtaining (say) a mortgage for years afterwards. (Although there has been a growth of mortgages available for people with bankruptcy records).
   
   
8. There may be negative stigma, bad publicity and the possibility of a public examination. The importance and implications of this will depend on each individual.