Need more information or have questions about bankruptcy? Here are some of the most frequently asked questions about bankruptcy.
Will my name be in all the papers?
This is often a worry for many people considering bankruptcy; however, since 2009 this has not been a common practice, unless there are exceptional circumstances requiring publication.
Our advisors also act in accordance with the Data Protection Act and uphold the strictest standards on confidentiality. The only publication your notice of bankruptcy will appear in is the London Gazette. This is a publication primarily read by people working within the professional services sector.
Will my name appear anywhere online in relation to the bankruptcy?
Your bankruptcy will appear on the Insolvency Register. This is a requirement for any bankrupt, however it is a resource typically used by professionals researching your financial background for any large purchase that you may have made.
Will my employment be affected?
Normal employment or self-employment will not be affected. Certain professions cannot allow its members to become bankrupt including a solicitor, an accountant and a charity trustee. Company directorships need the permission of the court to continue in that role.
Members of the armed forces and police should speak to their Welfare Officer before considering this step. You will also be unable to seek out a career with the armed forces or police if you are bankrupt or have recently been so.
Can I keep my home?
If you own your own home, it is possible that it may have to be sold, however it is also possible that it will not, subject to available equity, purchase of beneficial interest by a 3rd party or annulment procedures. Please refer to the “Your Home” section for further details on how a bankruptcy will affect a homeowner or tenant. Alternatively please speak with one of our experienced advisors.
How long will my bankruptcy last?
Normally a bankruptcy will last a maximum of 12 months. Charges on future earnings, assets and property values will continue for 36 months (three years).
What happens if I get into debt once I have been discharged?
Our advisors can equip you with tools and advice to help restart your financial life. However, should you incur further debts that you cannot repay once you have been discharged from the bankruptcy this could result in a further bankruptcy order.
What are the restrictions placed on a bankrupt?
While you are un-discharged from the bankruptcy, it is a criminal offence to obtain credit of £500 or more without disclosing your bankruptcy. You also should not carry on a business in a different name from the one you were made bankrupt with.
What is the role of the Official Receiver (OR) and Trustee?
The court will either appoint an OR or an Insolvency Practitioner (IP) to act as the trustee in your bankruptcy. The OR is a civil servant who works for the Insolvency Service and also acts as an officer of the court. He/she will have the responsibility of administering your bankruptcy and protecting your assets.
He/she is responsible for looking into your financial affairs for the period before and during the bankruptcy. He/she is then required to submit a report to the court and to the creditors on the findings of this investigation. As part of this investigation the OR will look for and must also report any indications that:
- You may have committed criminal offences in connection with your bankruptcy
- Your behaviour has been dishonest
- You have been in any other way to blame for your bankruptcy
The OR will be required to make enquiries to banks, building societies, mortgage, pension and insurance companies, solicitors, landlords and any other organisations that may be able to provide details of any assets or liabilities that you have, or have had, an interest in.
What are Income Payment Agreements, often referred to as an IPA?
The law allows the Official Receiver or trustee in bankruptcy to ask you to agree to make regular payments from your income into the bankruptcy estate for a specific period of time – payments are required from your surplus income which the courts are confident is available after your essential living costs.
Whilst you may enter into an IPA voluntarily, it is a written and formally binding agreement between you and the Official Receiver/trustee. It is important to acknowledge that should you fail to make the agreed payments, your trustee may apply to the court for an order suspending your discharge from bankruptcy. In this situation you will be required to abide to the restrictions of a bankruptcy order for longer.
If you prove to be disruptive and non-responsive to the trustees requests for increased payments through an IPA, he/she can file for an Income Payment Order, (IPO), against you.
What are Income Payment Orders, often referred to as an IPO?
An IPO is a court order, so if you don’t keep up the payments, your trustee may ask the court for an order suspending your discharge from bankruptcy, or they can ask for money to be taken directly from your wages, or take other legal action to recover the unpaid amounts.
There is no fixed amount for an IPA or IPO and each case will depend on individual circumstances, usually lasting around three years.
What is a Bankruptcy Restriction Order (BRO)?
If you are found to have accrued your debts recklessly, culpably or dishonestly, a BRO (Bankruptcy Restriction Order) could be imposed on you for between 2 and 15 years. This would extend the period of time that you would be subject to the above restrictions.
Examples of behaviour that may lead to a BRO being imposed include:
- Incurring debts that you knew you had no reasonable chance of repaying
- Giving away assets or selling them at less than their true value
- Deliberately paying off some creditors in preference to others
- Gambling or making rash speculations
- Being unreasonably extravagant
- Failing to keep or produce records that would explain a loss of money or property
- Fraud or fraudulent breach of trust
- Causing your debts to increase by neglecting your business affairs
- Failing to supply goods or services that have been paid for
- Carrying on a business when you knew or ought to have known that you could not pay your debts
The more harm the court considers has been caused by your behaviour, the longer the BRO is likely to last.
If entering bankruptcy, are there any debts which will not be included in this?
There are several debts which cannot be included in a bankruptcy. Please see the list below.
- Marital settlements
- Unpaid court fines
- Student loans
- Child maintenance/ CSA payments
If you have a question that is not answered here, please ask our qualified advisors on the ClearDebt online community: