From 1 April 2004, the law about individuals becoming bankrupt changed. These included:
Prior to April 2004, every first-time bankrupt was not discharged automatically until either two or three years from the date of the bankruptcy order.
The discharge period has now been reduced down to a maximum of 12 months since the date of the bankruptcy order.
If the second bankruptcy order is made, the one year automatic discharge will apply, but the court will take into consideration the first bankruptcy order when dealing with a bankruptcy restrictions order application.
New powers were introduced to allow the courts to make a bankruptcy restrictions order (BRO). A BRO will have the effect of imposing a variety of restrictions on you for between two and 15 years. For example, you will have to tell a prospective lender that you are the subject of a BRO if you apply for credit of more than £500; right up until the BRO comes to an end. If you are the subject of a BRO, you will still be discharged from the bankruptcy at the appropriate time, but you will remain under similar restrictions as an undischarged bankrupt.
When considering a bankruptcy restriction order (BRO), the courts will take into account:
Before the introduction of the new changes, the trustee could recover your interest in a property at any time after you had become bankrupt, including after your discharge. Since 1 April 2004, the trustee in bankruptcy will have three years from the date of the bankruptcy order to deal with your interest in the home. If the interest had not been disclosed to the Official Receiver and/or trustee, the three year period will usually start from the date the Official Receiver and/or trustee becomes aware of it. If the trustee has not disposed of the client's interest in the home within this time, it will revert to you.
Previously a bankrupt was automatically barred from holding a variety of posts, for example, acting as a local councillor. Some of these bans have been removed but they might be replaced by the same ban on a person who is the subject of a BRO. Other bans will still apply both to bankrupts and those subject to a BRO, for example, pension trustees.
Bankruptcy orders used to remain on the Individual Insolvency Register for five years from the date of the bankruptcy order. Anyone who is bankrupt now will be removed from the register three months after discharge. However, BROs will remain on the register for their total length, which could be up to 15 years.
If bankruptcy may be an option for you, talk to one of our advisors. It won’t cost you anything to get advice! Our specialists will be able to discuss all your options and if bankruptcy is the right options for you, we will be able to assist you every step of the way, from making the bankruptcy application, to attending court.