Bankruptcy Restrictions Order: When Do They Apply?

When it comes to navigating the complexities of bankruptcy, understanding the role of a Bankruptcy Restrictions Order (BRO) is crucial. A BRO, issued under the Insolvency Act 1986, is a tool utilised by the Official Receiver to impose restrictions on a bankrupt individual when they have conducted themselves improperly. This post will delve into the specifics of a BRO, when they apply, and their implications for those considering bankruptcy.

Understanding Bankruptcy Restrictions Order (BRO)

A Bankruptcy Restrictions Order is a legal order that extends the restrictions of bankruptcy, typically for 2 to 15 years. These restrictions might include limitations on borrowing money, acting as a company director, or even working in certain professions.

A BRO is not automatically applied in every bankruptcy case. It is only issued when the Official Receiver, the person responsible for managing your bankruptcy, believes you have been dishonest, or you have not cooperated with them.

Examples of BRO Causes

The Official Receiver might apply to the court for a BRO if you:

– Made excessive credit card purchases without the intention or ability to repay
– Engaged in fraudulent activities to avoid paying your debts
– Failed to cooperate with your bankruptcy proceedings
– Took on excessive debts, knowing you would not be able to repay

The Impact of a Bankruptcy Restrictions Order

The impact of a BRO can be significant and long-lasting. Primarily, it extends the period in which the restrictions of bankruptcy apply. This can affect your ability to take on credit, run a business, or even work in certain professions.

Credit Restrictions

With a BRO, you’re required to inform any lender if you’re borrowing more than £500. This includes credit cards, loans, and even contracts for mobile phones or broadband.

Professional Limitations

Certain professions, including law and accountancy, may have professional bodies that restrict or bar anyone with a BRO from practising.

Avoiding a Bankruptcy Restrictions Order

Avoiding a BRO is straightforward if you cooperate fully with the Official Receiver and behave responsibly with your finances. This might include:

– Providing all the information and documents requested by the Official Receiver
– Not taking on additional debts if you know you will not be able to repay them
– Not giving away assets or selling them for less than their value to avoid paying creditors

Practical Tips for Dealing with BRO

1. **Be Honest and Open**: Always provide accurate information to the Official Receiver. This includes information about your assets, liabilities, income, and expenses.

2. **Cooperate Fully**: Cooperate with the Official Receiver during your bankruptcy. This includes providing all requested documents in a timely manner.

3. **Seek Legal Advice**: If a BRO is being considered for your case, seek legal advice. A legal professional can guide you through the process and provide advice on how to respond.

4. **Understand the Restrictions**: If a BRO is applied, understand the restrictions that are in place and abide by them. Failure to do so can result in further legal consequences.

Conclusion

Understanding the implications of a Bankruptcy Restrictions Order (BRO) is crucial for anyone considering bankruptcy or currently navigating the process. With full cooperation, honesty, and a sound understanding of the restrictions, it is possible to navigate this challenging period effectively.