Opposing bankruptcy decisions

A bankruptcy petition is an application seeking an individual’s bankruptcy.

You can apply for your own bankruptcy if you cannot afford to pay your debts. This is now an online application to an adjudicator and you do not need to attend court.

A creditor can petition for your bankruptcy if it can prove you are unable to pay your debts. Usually the required proof is if the creditor has served a statutory demand on you and you have been unable to pay it within 21 days. The Court will list the petition for a hearing and if the Court is satisfied that you cannot pay your debts, it will make a bankruptcy order.

If a bankruptcy petition is presented by a creditor, there are limited grounds on which a you may oppose the making of a bankruptcy order.

The Court must be satisfied that an undisputed debt exists. If the debt is disputed, the Court may dismiss the petition if the you raise a genuinely triable issue. Arguments which have already been made in an application to set aside a statutory demand and have not been successful, cannot be reheard on the hearing of the bankruptcy petition.

The Court may also dismiss the petition if it is satisfied that you can pay all of your debts or you have made an offer to secure or compound the petition debt and that the offer has been unreasonably refused.

Even though a bankruptcy petition has been presented, it may still be possible to negotiate a settlement with the petitioning creditor. The creditor is likely to look at bankruptcy as a last resort as it will be in no better position than other unsecured creditors, and may only receive a few pennies in the pound after a bankruptcy order has been made. Commercially, a creditor may still be prepared to accept a reduced figure or instalment payments.