Jane and her husband, Ian, own a sheep farm. Their business is Essay

Jane and her husband, Ian, own a sheep farm. Their business is struggling financially. Jane and Ian are receiving a number of final demands for bills that they - Essay Example This situation is very difficult as it can lead to legal suit against them by the creditors, inability to meet the basic needs, and even embarrassment. Therefore, it is critical that the affected parties have legal alternatives to the situation, as well as fundamental approach to it. The most realistic legal approach to Jane and Ian is to file for bankruptcy. Bankruptcy is a legal proceeding that allows people who cannot meet their financial obligations to have alternatives to meet these obligations (Keay and Walton, 2008, p. 14). Basically, it is one of the ways of dealing with debts that an individual is unable to pay. An individual who has been declared bankrupt is subject to certain restrictions and is freed from his or her debts after a given period of time. Under the UK laws, bankruptcy is governed by the Insolvency Act 1986 and the Insolvency Rules 1986 (Keay and Walton, 2008, p. 17). An individual can be made bankrupt through a court order after presenting a bankruptcy petition. This petition may be presented by an individual on the ground that he or she cannot afford to pay debts or by a creditor against the debtor. Considering Jane and Ian’s situation, applying for bankruptcy would be the most preferred option of overcoming their problem. As noted in the case of Re Cheyne Finance plc [2007], bankruptcy encompasses the consideration that an individual cannot afford to pay debts as they fall due and also the consideration that this individual may not be able to pay future bills (Keay and Walton, 2008, p. 101). This interpretation shows that if Jane and Ian file for insolvency, they will be covered against current and future debts. Before applying for bankruptcy, they should be aware of the restrictions that they will be subjected to: they cannot raise credit without informing the creditor that they are bankrupt; and they have to give information to their trustee and cooperate with