When you are declared bankrupt, the Official Receiver takes ownership of all your assets apart from any that are necessary for your business or basic domestic needs. The Official Receiver will investigate your finances and will interview you to establish the circumstances leading to your bankruptcy, and to ensure that there is nothing suspicious in these.
After the initial period, either the Official Receiver or an insolvency practitioner will act as your ‘trustee in bankruptcy’, taking care of selling the assets and making payments to creditors. You will only be allowed to keep enough income to fund a modest lifestyle, with any extra going towards your debts. Additionally, you are not allowed to borrow more than £500 without disclosing that you are bankrupt. In most cases, you will remain bankrupt for a maximum of twelve months (although this may be less in some cases).
You will then receive an automatic discharge and will no longer be bound by the constraints of bankruptcy. Two aspects may however continue to affect you after this time. First, your assets will not be returned to you but will remain the property of your trustee in bankruptcy (including your house) if the trustee has not already sold it. The trustee in bankruptcy will have to realise his interest in your house within three years or lose his interest in it. Secondly, if your trustee has sought regular monthly contributions from your income, these will continue for a further 2 years.
If you have behaved culpably, recklessly or fraudulently, the court may impose a bankruptcy restriction order (BRO) on you for between two and fifteen years after you are discharged from bankruptcy. For example, this might happen if you continued borrowing at a significant level with little prospect of repaying the debt, spent recklessly, gambled heavily or tried to conceal assets. A BRO prevents you from being a company director, borrowing over £500 or trading under a different name from the one you were using when you were made bankrupt.