The effect of bankruptcy

Responsibilities

Some of your responsibilities as a bankrupt include the following:

• You must provide to the trustee all such information as to your affairs, attend on the trustee at such times and do all such other things as the TIB may require for purposes of carrying out their functions.
• You must disclose to the TIB any property acquired or any increase in income received after the date of the bankruptcy order within 21 days of becoming aware of it.
• You must, at the request of the OR, give to the OR by the specified date, the accounts relating to your affairs. The OR will set out the nature of the accounts needed and the period that those accounts should cover.
• If the OR delivers a notice to you requiring you to supply a statement of affairs, you must do so within 21 day of receiving the notice, unless the OR has allowed more time to do this. Each page of the statement of affairs must be signed and dated. It must also be verified by a statement of truth. The contents of the statement of affairs are prescribed and must include, for example:
• Details identifying you and the bankruptcy order
• Details of your secured and unsecured creditors
• A list of all your assets and their value

Restrictions

Some of your restrictions include the following:

• You can't during your bankruptcy or while a bankruptcy restrictions order is in place, get credit, (and this includes buying goods under a hire-purchase or conditional sale agreement), for more than £500 without disclosing that you are an undischarged bankrupt.
• You may not, without the court's permission, act as a director of a company or be involved in the creation or management of a company while you are an undischarged bankrupt.
• While you are an undischarged bankrupt you can't act as trustee of a charity (unless given permission under the Company Directors Disqualification Act) or as a trustee of a Pension trust.
• While you are an undischarged bankrupt you can't trade under a new name to the one you became bankrupt in unless you make all customers and suppliers aware of your bankruptcy.
• You can't work as a solicitor without permission from the Solicitors Regulation Authority or as an insolvency practitioner while being subject to bankruptcy restrictions.
• You can't be appointed as an attorney in a lasting power of attorney (England & Wales) or enduring power of attorney (Northern Ireland) relating to the donor's property and financial affairs.

Bankruptcy restrictions order and bankruptcy restrictions undertaking

If the OR believes that you've been dishonest or are to blame for your bankruptcy debts the court can make a bankruptcy restrictions order (BRO) against you. This application would be made by the Secretary of State or the OR acting at the direction of the Secretary of State. The Secretary of State or OR may apply for a BRO at any time within a year of your bankruptcy order, but require the court's permission to make an application after that time.

The BRO effectively extends the period that you will be subject to the above obligations and restrictions and can add further restrictions.

Some of your actions that could result in a BRO application are:

• you give away assets or sell them for less than their true value;
• you pay some creditors in preference to others;
• you make excessive pension contributions;
• you don't co-operate with the OR or other TIB;
• you behave in a fraudulent manner; or
• you trade before or during your bankruptcy while knowing you can't pay your debts.

The BRO can continue for up to 15 years but not less than 2 years, as determined by the court. The BRO is not affected by your discharge from bankruptcy. You could agree to a bankruptcy restrictions undertaking (BRU), which has the same effect as a BRO, but avoids the need for a court application.