Important Considerations and Restrictions
Loss of Assets
You can lose assets of value including your home or your share in it if jointly owned.
Anything of worth which can easily by sold to raise money to pay into the bankruptcy could be taken from you.
- Household items essential for basic domestic needs – clothes, furniture, TV etc.
- A modest vehicle depending on circumstances.
- Items needed for trade or employment, such as tools and computing equipment.
- Money held in approved in funds.
- Money obtained from a student loan, if a balance of the loan remains payable.
There is uncertainty at present as to whether benefits under a pension could ‘forced’ to be taken if you’re 55 years old or older. A case in the court of appeal is pending.
Impact on business affairs
Any business you have will almost certainly be closed down, and an assessment made as to whether it could be sold for the benefit of your creditors.
You may not be, or act as, the director of a limited company; or be directly or indirectly involved in the formation, running and management of a limited company – without the permission of the court.
You can continue to trade but subject to the restrictions imposed by the Insolvency Service during your bankruptcy period.
Impact on Employment
Bankruptcy could affect your employment. In some jobs, a record of bankruptcy may lead to dismissal, demotion or other issues.
Your employer or any potential employer may be unwilling to employ someone who has been bankrupt in a role of responsibility involving finance or the handling of money.
Some professional membership bodies don’t allow undischarged bankrupts to remain members.
You can’t do any of the following jobs while bankrupt
- Charity trustee
- Company director (without court permission)
- Insolvency Practitioner
- Justice of the Peace
If you work in the following industries, you should check whether bankruptcy will have any impact on your job:
- Armed forces
- Anything cash handling, for example banking, payroll or security
- Financial services, for example accountant, mortgage broker, stock broker or financial advisor
- Law, for example solicitor or legal executive
- Medicine, for example GP or dentist
- Property, for example estate agent, letting agent
- Pub licensee
Getting Credit When Bankrupt And later
You may not obtain credit of £500 or more in total, without disclosing your bankrupt status. This includes ordering goods on credit.
Entering into a Bankruptcy has a negative impact on your credit rating for 6 years, which is how long information is retained by the credit reference agencies.
When applying for a mortgage you may be asked if you have ever been made bankrupt.
Becoming bankrupt is not a criminal offence, however breaching the restrictions (examples above) could lead to criminal proceedings
Bankruptcy Restriction Orders (BRO)
If the Trustee considers you to be blameworthy, reckless or dishonest in your financial affairs and this contributed to your bankruptcy, a Bankruptcy Restriction Order can be made against you. This prolongs the above restrictions and adds further restrictions to your activities.