What is a creditor petition for bankruptcy?

Updated: 2nd February 2021

Understanding a bankruptcy order to begin formal repayment process

A creditor petition for bankruptcy is an application made to the court by a creditor, typically after several unsuccessful attempts have been made to recover their debt. If a bankruptcy order is subsequently made, the debtor’s assets are then sold with a view to repaying the creditor.

It’s a process strictly governed by regulation, and one that requires creditors to complete certain steps before the court will consider their application. It’s also a costly process for the creditor – currently £990 for the petition deposit, plus court fees of £280.

So what criteria must be met by a creditor prior to petitioning for an individual’s bankruptcy, and what process must they follow?

Criteria for making a bankruptcy petition

To make a bankruptcy petition, the debt must be £5,000 or more and owed either to one creditor or a group of creditors. They must be able to prove they’ve attempted to collect the debt, and this is typically done in one of the following ways:

  • Serving a 21-day statutory demand on the debtor, which remains unpaid and not secured - with a charging order or guarantee, for example - and where the debtor has not applied for the statutory demand to be set aside.
  • Taking enforcement action, such as using bailiffs to seize assets for sale, or other enforcement measures

What is a statutory demand?

A statutory demand is an important part of the process when a creditor wants to petition for bankruptcy. It’s a formal demand for payment of a debt that is typically served on a debtor in person.

The debtor has 21 days from receiving the demand to pay the debt in full, or come to an arrangement to pay in instalments. If this doesn’t happen the creditor has four months in which to make a petition for bankruptcy.

The creditor petition for bankruptcy – what is involved?

Petitioning for the bankruptcy of an individual requires the creditor to take certain steps, including signing a declaration to confirm they’ve searched for other bankruptcy petitions against the debtor during the previous 18 months.

If a petition has been made, the creditor can choose to support it rather than carrying on with their own petition, which given the high fees associated with making someone bankrupt, can be beneficial on cost grounds alone.

In addition to signing the declaration the creditor must sign a ‘statement of truth’ regarding the details in the petition, and provide evidence that the money is actually owed.

Submitting the bankruptcy petition

Under some circumstances the petition should be submitted online, and will be dealt with by the High Court - if the debt amounts to £50,000 and the debtor lives in London, or they have no fixed address.

Otherwise, it should be handed to the county court located most closely to the debtor, with a copy also being served on them personally. A hearing will then be arranged for not less than 14 days later.

The bankruptcy hearing

The court has a number of options when all the evidence has been presented and the bankruptcy hearing concludes:

  • Cease or delay proceedings (known as a ‘stay of execution’) – sometimes this option is used so the debtor can organise their finances with a view to paying the debt, or to allow more time for evidence to be presented
  • Dismiss the petition if they believe the creditor is being unreasonable in refusing offers to pay in instalments, or it’s found that the debt has already been paid off
  • Make a bankruptcy order

When a bankruptcy order is made

The Official Receiver (OR) takes control of an individual’s assets when a bankruptcy order is made, and also decides whether or not the debtor has sufficient residual income to make monthly payments to creditors via an Income Payments Agreement (IPA).

Their assets are sold to repay creditors, but repayment takes place in a strict order of priority set out in the Insolvency Act, 1986. Unfortunately, unsecured creditors rarely receive a high return from a bankruptcy process as they are placed at the end of the payment ‘hierarchy.’ Creditors make their claim for repayment using a ‘proof of debt’ form.

Bankruptcy generally lasts for a period of 12 months in England, Wales, and Northern Ireland, after which time the debtor may be discharged if they’ve cooperated fully in the process. Scotland operates a different system regarding individual bankruptcy.

If you would like more information about creditor petitions for bankruptcy, Begbies Traynor can help. We are bankruptcy experts and will offer a more detailed insight into how the process works. Call one of the team for a free same-day consultation – we operate from more than 50 offices nationwide.

Network of Over 100 UK Offices

Find your local Begbies Traynor Group office and speak to an adviser today.

Find your Local Office
0800 063 9221

Call our Confidential Advice Line. Calls to this number are free of charge.

Call us now...
Request a Meeting

We invite you to come and discuss your enquiry with us at your convenience.

Request a meeting...
0800 464 0871

Call our Confidential Advice Line. Calls to this number are free of charge.

Call us now...
Request a Meeting

We invite you to come and discuss your enquiry with us at your convenience.

Request a meeting...
0161 837 1700

Call our Confidential Advice Line. Calls to this number are free of charge.

Call us now...
Request a Meeting

We invite you to come and discuss your enquiry with us at your convenience.

Request a meeting...
Begbies Traynor Group plc, announces that it has completed the acquisition of CVR Global LLP
CVR is a leading independent firm of insolvency practitioners, forensic accountants and experts in other related complementary disciplines.
Read More →
Coronavirus pushes financially distressed companies over the half-million mark
Number of businesses in significant distress stands at 509,000 – the highest number measured by the Red Flag Alert research
Read More →
BTG Advisory accelerates growth with appointment of four new partners to its London office
BTG Advisory, the boutique advisory arm of Begbies Traynor Group announces the appointment of four new partners to its Canary Wharf office
Read More →
Eighty jobs saved with £1m sale of engineering business
South Yorkshire company Newburgh Precision rescued through administration
Sale enables 75-year-old business to continue trading
Read More →
Join thousands of professionals by signing up for our updates
Analysis and Opinion from our Partners
Top Industry News
Register Now →

Advice you can trust

We are accredited by the following industry leading organisations

Insolvency Practitioners Association Institute of Chartered Accountants in England and Wales R3: Association of Business Recovery Professionals ICAEW Business Advice Service Turnaround Management Association ICAS | The Institute of Chartered Accountants of Scotland

Contact the Begbies Traynor Group team

or Find your Nearest Office

Here at Begbies Traynor Group we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY


This site uses cookies to monitor site performance and provide a more responsive and personalised experience. You must agree to our use of certain cookies. For more information on how we use and manage cookies please read our PRIVACY POLICY