Bankruptcy restrictions

When an individual is made bankrupt, there are numerous restrictions placed on him/ her.

There are quite a few serious bankruptcy offences which may be committed by a bankrupt either before or after the start of the bankruptcy. The most severe offences can carry a prison sentence of 7 years and an unlimited fine.

The offences include:

1. Obtaining credit in excess of £500 without disclosing that they are bankrupt
2. Falsifying documents or records
3. Making false statements
4. Failure to disclose all the property which is, or should be, comprised in the bankruptcy estate
5. Engaging in business using a different name other than the name used under the bankruptcy
6. Absconding with property
7. Fraudulently disposing of property
8. Failure to deliver property, books, papers, records to the Official Receiver or trustee

There are certain mitigating circumstances to bankruptcy offences. If the individual can demonstrate that there was no motive in committing the act in question and or defrauding creditors, then these matters will be taken in to consideration when legal proceedings are commenced by the Official Receiver or Trustee in bankruptcy.

Bankruptcy Restrictions

There are several boundaries that apply to all undischarged bankrupts. These include acting as a director of a company of being involved directly or indirectly in the management or formation of a company or even being a trustee of a charity. Despite these restrictions, a bankrupt can still actually apply for permission to be a director whilst bankrupt.

There are some additional restrictions which apply where a bankrupt is subject to a BRO (Bankruptcy Restrictions Order). An application to the court for a BRO can be made by the Official Receiver or Secretary of State in the case of ‘culpable bankrupt’.

These include individuals who have taken on credit or deliberately increased the amount of credit knowing that there was no chance of repaying this. Also where they are otherwise at fault for the bankruptcy in the first place by purposeful acts or neglect which would cause a considerable financial loss.

A BRO can be between 2-15 years and there is a ‘measure’ of severe conduct that the court will consider when determining how long the restrictions should last for. In order to avoid the costs and ambiguity of the outcome of an application to the court for a BRO, there is a process whereby a bankrupt may decide to agree to give a written undertaking to comply with the bankruptcy restrictions, however, this has the same consequences as entering into a BRO. Failure to obey the restrictions of a BRO is a criminal offence.

Next Step

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