Bankruptcy normally lasts for one year, although the Official Receiver or Trustee can extend this period if the bankrupt is seen not to be cooperating by the Official Receiver or Trustee making an application to suspend the discharge. This is usually done by the Official Receiver or Trustee obtaining a Bankruptcy Restriction Order, postponing the bankrupt from obtaining his discharge. You can check whether you have been automatically discharged by checking the Individual Insolvency Register (IIR) .
After the court makes a bankruptcy order, the bankrupt is required to attend the Official Receiver to complete a questionnaire (Preliminary Information Questionnaire). This booklet asks for a bankrupt to set out his income, assets and liabilities. The Official Receiver usually records the interview and then decides whether to appoint a Trustee in Bankruptcy to sell assets to pay creditors.
When a person is made bankrupt, his assets pass to the Official Receiver/Trustee in Bankruptcy. This will not affect the ownership of any co-owner, such as a spouse, however they will be unable to sell the property without the Trustee’s permission.
The Official Receiver or Trustee will not sell the family home during the first year of the bankruptcy and have three years from the date of the bankruptcy order to make an application to sell the home. Should the Trustee not make an application in this three year period, the property will revert back to the bankrupt. However, this three year rule only applies to the family home.
You will be able to own any property you acquire after having obtained a discharge of your bankruptcy, i.e. after one year of your bankruptcy, providing that the source of funds (deposit monies) do not flow from any assets belonging to your “Bankruptcy Estate”. Your bankruptcy estate comprises of all of your assets which you owned at the date of the bankruptcy order being made against you as these pass to the Official Receiver or your Trustee in bankruptcy.
What property does the bankrupt not lose?
- The bankrupt is entitled to keep hold of all tools, books, vehicles and other items of equipment that are necessary for the bankrupt’s personal use in his business, vacation or employment.
- All clothing, bedding, furniture, household equipment and provisions that are necessary for the basic domestic needs of the bankrupt and his family.
Whilst the Insolvency Service will notify credit agencies of your discharge from bankruptcy, notice of your bankruptcy will stay on your file for a minimum of 6 years from the date of the bankruptcy order. However, your credit score starts to improve from the point the credit agencies receive notification that your bankruptcy has been discharged.
The main alternatives to bankruptcy are entering into deals with creditors, also known as debt management plans or informal arrangements. An individual voluntary arrangement (IVA) known as a formal arrangement, may also be an option.
The following banks allow bankrupts to operate accounts:
We are unable to provide specific advice on which account may be best to operate.
- Barclays Bank – Cash Card Account
- Card One Banking – Prepaid MasterCard
- Cashplus – MasterCard prepaid Card
- ClearCash – MasterCard prepaid
- Eccount money – Visa prepaid Debit Card
- Ffrees – Visa prepaid Debit Card
- Metro Bank – Cash Account (*certain restrictions apply)
- RBS – Basic Account
- Secure Trust Bank – Master Card Pre Paid Card
- The Cooperative – Cash Minder Account
Please contact us if you require any legal advice in relation to bankruptcy.