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Bankruptcy – your responsibilities and restrictions
If you have been made bankrupt, you have certain responsibilities towards managing your finances, employment and business. These responsibilities are called the bankruptcy restrictions. Find out what they are and how long they last.
What are the bankruptcy restrictions?
When a court makes you bankrupt, you have to follow a set of rules called 'bankruptcy restrictions'. These do not allow you to:
- borrow more than £500 without telling the lender you are bankrupt
- act as the director of a company
- create, manage or promote a company without the court’s permission
- manage a business without telling those you do business with you are bankrupt
- work as an insolvency practitioner (an authorised debt specialist)
It is a criminal offence to break any of the bankruptcy restrictions. Contact your local Citizens Advice Bureau or the National Debtline for free help and advice on how the bankruptcy restrictions can affect you.
You can pass on information about people who break the bankruptcy restrictions to The Insolvency Service. Telephone their enforcement hotline (0845 601 3546) or use their online form.
When do your bankruptcy restrictions end?
Bankruptcy usually lasts for 12 months from the date that the court made you bankrupt. After this time, your bankruptcy and the bankruptcy restrictions usually come to an end. However, the restrictions can continue for 2 to 15 years after your bankruptcy ends if careless, criminal or dishonest behaviour were the main causes of your bankruptcy.
Reporting on the causes of your bankruptcy
After you have been made bankrupt, the Official Receiver (the court’s bankruptcy officer) will write a report on the causes of your bankruptcy. The report will help the Official Receiver identify any careless or dishonest behaviour. Examples of this include:
- being bankrupt for the second time in six years
- selling your assets for less than their real value – for example, your home or car
- providing false information to get credit – for example, on an application form for a loan
- taking on debts you knew you could not repay – for example, credit card debts
- carrying on a business when you knew you could not repay your business debts
To help the Official Receiver write their report, you will be asked to provide copies of:
- bank statements
- letters to and from your creditors (people you owe money to)
- financial application forms – for example, for overdrafts, loans or credit cards
You must co-operate with the Official Receiver and provide the information they ask for. Failure to provide the information can lead to further court action.
How the bankruptcy restrictions can be extended
The bankruptcy restrictions will continue after your bankruptcy ends if the court agrees with the findings of the Official Receiver’s report. This report must be sent to the court by the Official Receiver within 12 months of your bankruptcy being made. After this time, the court will not accept their request.
There are three steps in the process.
Step one: the Official Receiver will send you a copy of their report. You have 14 days to confirm you have received it. You can do this by writing to the court that dealt with your bankruptcy or going there in person.
Step two: the Official Receiver will ask you to agree to continue with the bankruptcy restrictions after your bankruptcy ends.
If you agree, you will not have to go to court and the length of time the bankruptcy restrictions continue for may be reduced. This type of agreement is called a Bankruptcy Restrictions Undertaking.
If you don’t agree, you will have to go to court. The Official Receiver will ask the court to issue an order continuing the restrictions. This order is called a Bankruptcy Restrictions Order. You should get independent legal advice if you go to court.
Step three: the court can:
- agree to a Bankruptcy Restrictions Undertaking
- issue a Bankruptcy Restrictions Order
- reject the Official Receiver’s request for a Bankruptcy Restrictions Order
- delay the case and ask for more information
The length of time that the restrictions continue for will be decided by the court and confirmed to you in writing by the Official Receiver.
Publishing details of your bankruptcy restrictions
Details of your Bankruptcy Restrictions Undertaking or Bankruptcy Restrictions Order will be made available to the public. Your name, address and the length of time you are subject to the bankruptcy restrictions will be published in:
- the Individual Insolvency Register - an online database of bankruptcies in England and Wales
- the 'London Gazette' - a publication of legal notices
- your local papers, if they report on bankruptcies