How long do bankruptcy restrictions last?

In short, restrictions last until an individual’s bankruptcy ends. Provided the debtor cooperates with his or her trustee in bankruptcy and has not been dishonest, the debtor will usually be free from restrictions when twelve months have elapsed. If the debtor has not cooperated, the trustee in bankruptcy may apply to the courts to have the twelve months automatic discharge suspended until the debtor cooperates.

Furthermore, if upon investigation it comes to light that the debtor is found to have committed a bankruptcy offence then the Official Receiver (OR) may impose a Bankruptcy Restriction Order (BRO) or accept a Bankruptcy Restriction Undertaking (BRU) from the debtor.

Offences giving rise to a BRO or BRU include:

• gifting or transferring at an undervalue bankruptcy assets
• preferring one creditor over another
• borrowing money in the knowledge that it cannot be repaid
• neglecting business affairs and in so doing increasing the debts of the business
• not cooperating with the Official Receiver
• fraudulent or dishonest behaviour, for example providing false information to obtain credit

If a debtor willingly accepts the OR’s findings or wishes to avoid the time and costs of attending court by reaching an agreement with the OR, he or she may provide the OR with a BRU. Typically, this will increase the bankruptcy restriction period from twelve months to three to four years.

If no BRU is provided, the OR can make an application to Court for a BRO to extend the bankruptcy restriction period to between two and fifteen years. This effectively brings the bankruptcy restrictions regime in line with company directors disqualification guidelines in that a company director found guilty of an Insolvency Act or Companies Act offence can be disqualified from being a director for two to fifteen years.

Next Steps 

If you want to find out anything further about this topic then please feel free to call me on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com.

This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.