9. How can my creditor make me bankrupt?
Your creditor can petition the sheriff court to make you bankrupt.
They can do this if:
- you owe them at least £3,000 including any fees charges and interest added to the original debt; and
- they have sent you a copy of the Debt Advice and Information Package; and
- you are apparently insolvent. This means that you have not paid the debt after you have been served with either a charge for payment ( see here) or a statutory demand (a statutory demand is a formal document issued by a creditor to demand payment of a debt within 21 days).
After the petition has been lodged with the court you will be sent a document called a warrant to cite which will tell you who is petitioning for your bankruptcy and the date on which a hearing to consider the petition will be held.
If you pay your creditor before the hearing date the petition will normally be dismissed.
Courts will not take payment at the hearing - you must pay before this date.
If you do not pay, you can attend court and can be represented, to say why the bankruptcy should not be awarded or to ask for time to settle the debt. The court can postpone the decision for a maximum of 6 weeks to allow you to pay or for longer if you intend to repay under the Debt Arrangement Scheme.
If you do nothing, the court will award the bankruptcy. A trustee will be appointed to administer your bankruptcy. Your trustee can sell your assets, including your home, and use the money to pay the costs of managing your bankruptcy and to pay your creditors as much as possible of what you owe them.
More detailed information is available from the accountant in bankruptcy who issues a range of publications. Contact details are at the back of this booklet.