Last updated: 23/07/2020 | Estimated Reading Time: 2 minutes
If you've been declared bankrupt, you'll have certain restrictions imposed on your financial and working life. We'll go through what kind of restrictions you can expect and how long you'll have to adhere to them for over the course of this guide.
In This Guide:
- What can't I do while bankrupt?
- What will happen to my assets if I'm declared bankrupt?
- How long do bankruptcy restrictions last?
What can't I do while bankrupt?
When you’ve been declared bankrupt, you are forbidden from doing any of the following:
- Directing a company
- Starting or managing a company without the consent of the court
- Managing a company under a different name without informing those you do business with that you are currently bankrupt
- Working as an insolvency practitioner
- Taking a loan out worth over £500 without informing the lender or your bankruptcy.
It is important to note that breaching any of these restrictions is a criminal offense and doing so can result in prosecution.
What will happen to my assets if I'm declared bankrupt?
As part of your bankruptcy order, all of your non-essential assets will be sold in order to come up with as much money as possible to pay off your existing debts.
Assets considered essential that you may be allowed to keep include anything you need for work, like tools or a vehicle, and any basic household necessities like bedding and clothing.
You should note though that your house, or at least a portion of its value, may be included in the assets sold if doing so is one of the only ways to raise the money necessary to pay off your debts.
This will involve giving up you beneficial interest (that is, the portion of the property you own after secured loans like mortgages have been paid off) in the property.
You may also be required to remortgage your property if doing so will release any equity that you can put towards repayments.
How long do bankruptcy restrictions last?
Bankruptcy restrictions will last as long as the bankruptcy order does, which is usually 12 months to the day from your declaration of bankruptcy.
However, the length of these restrictions may well be extended for certain reasons.
If, in any way, you fail to co-operate with the parties involved during the course of your bankruptcy order, then the length of your restrictions may be extended.
If your restrictions are to be extended then you will be notified by your trustee or official receiver who is taking care of your bankruptcy case. You can reject the extension but if you do, then the relevant parties will get in touch with the courts to have a legally binding Bankruptcy Restrictions Order taken out against you.
If you’re bankrupt and want to find out when your restrictions will be lifted, then have a look at the Individual Insolvency Register online, where all of the relevant information will be displayed.