02: Procedure before the making of the bankruptcy order

  • Bankruptcy is begun by the presentation of a petition for a bankruptcy order.
  • The petitioner, who is usually a creditor (or the debtor, personally), must prove that the debtor cannot pay their debts.
  • The court will only consider a creditor’s petition if the debtor owes that creditor or group of creditors at least £750, the amount is unsecured, and the creditor must allege that the debtor cannot pay the debt, or has little prospect of being able to pay it.
  • Before the court will make the order, the debtor’s inability to pay the debt may be proved by showing that a ‘statutory demand’ served on the debtor requiring them to pay has not been complied with within three weeks. Alternatively, it can be established by showing that a judgment debt has been returned unsatisfied in whole or in part.
  • A debtor who is the subject of a bankruptcy petition may attempt to dispose of property before being adjudicated bankrupt. If the debtor is later adjudicated bankrupt, any property disposed of or payment of money made after the presentation of a petition is void, unless the transaction is approved by the court.

Debtor’s petition

A debtor may present a petition themselves to start their own bankruptcy proceedings, particularly where creditors are harassing them for payment but are not petitioning. The only grounds are that the debtor cannot pay their debts.