The bankruptcy process
A petition is presented to court and the order will be made if the court official considers
bankruptcy appropriate. This is followed by an interview with the Official Receiver, who
initially acts as Trustee in Bankruptcy. The Official Receiver has 12 weeks to decide
whether an independent Trustee should be appointed to manage the bankruptcy and if
so, whether a meeting should be held to appoint the Trustee.
Period of Bankruptcy
As of 1st April 2004 the discharge period for bankruptcy is twelve months after the
date of the Order or sooner if the Official Receiver reports that there are no matters of
concern. For those individuals who were made bankrupt before 1 April 2004, they will
get their discharge after three years or on 1 April 2005, whichever is sooner.
From April 1st 2004 second and subsequent bankruptcies will be treated the same as
the first bankruptcies i.e. discharge 12 months after the date of the Order. That is
unless the discharge is suspended because the bankrupt has not co-operated with their
Trustee.
Effect of Bankruptcy
Whilst bankrupt, if you have surplus income after taking into account your reasonable
costs of living, the Trustee will ask for a monthly contribution from your income for a
period of three years; as such payments continue beyond the discharge period.
The assets excluded from bankruptcy comprise:
• Personal possessions of a reasonable value
• Tools of trade, for example a car that is needed for work purposes
• Equity in property of £1,000
However, the Trustee can insist that assets which have a material value, for example
expensive cars, furniture, etc are sold and replaced with cheaper alternatives.
The bankruptcy proceedings are advertised in a local newspaper and in the London
Gazette.
Bankruptcy Restriction Orders "BRO"
New laws have been introduced which are aimed at protecting the public from those
bankrupt's whose conduct has been either reckless or irresponsible. The Official
Receiver can apply to Court for a BRO to be made against an individual and the effect
of such an order includes:-
• Obtaining credit beyond £500 without Court's permission is a criminal offence
• The Bankrupt has to trade in the name under which the person he/she was adjudged
bankrupt
• Prohibition from acting as a director of a limited company
The period of the BRO will depend on how culpable the bankrupt is deemed to be. As a
guide the period for the restrictions is imposed as follows:
• 2 - 15 years Culpable
• 5 - 10 years Reckless
• 10 - 15 years Dishonest
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