Legal Problem Response - Jane and Ians Situation - Essay Example

This situation is very difficult as it can lead to a legal suit against them by the creditors, inability to meet their basic needs, and even embarrassment. Therefore, it is critical that the affected parties have legal alternatives to the situation, as well as a fundamental approach to it.

The most realistic legal approach for 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 him in their assets’ administration (Keay and Walton, 2008, p. 87). So, how will they apply for bankruptcy? Any person can apply to the court to declare them bankrupt. Since they are individuals (a couple), they can make themselves bankrupt by petitioning the court. It is wise to do this before the creditors do it to avoid the emotional anguish that may arise as a result of that. However, they should be aware that bankruptcy normally lasts for 12 months and therefore should make efforts within that period to put their financial house in order.

Alternatively, Jane and Ian can seek to address their problem through a non-legal approach. This approach will entail minimizing their expenditure in order to save money and be able to pay outstanding bills. Also, they can negotiate with creditors to extend or postpone the repayment period. This will involve making tough sacrifices such as buying cheaper stuff and reducing expenditure on gasoline and food. Whereas this approach involves making difficult decisions and sacrifices, it might be the best as they try to struggle out of the financial situation they are in at the moment.