Bankruptcy – Your Responsibilities and Restrictions

Declaring bankruptcy is a means of expressing your inability to pay your debts, but that does not restrict your from shouldering responsibilities towards the whole process. There are bankruptcy responsibilities and restrictions that are imposed by the court during and after the tenure of your bankruptcy. It is always good to keep yourself aware of the various restrictions and responsibilities to make sure that you do not violate any conditions of your bankruptcy.

Bankruptcy Restrictions

The court draws a number of regulations to be followed during your bankruptcy tenure and these set of rules are known as the ‘bankruptcy restrictions’. These rules are imposed on your borrowing capacity and your working rules so as to make sure that you do not get involved in further debts or complications.

The court levies a restriction on borrowing an amount more than £500 without informing the creditor about your bankruptcy. You are also not allowed to act as a director of a company or to manage or work towards a company’s promotion without due permission from the court. The court also holds you responsible for declaring about your bankruptcy to anyone who is involved in a business with you. You are also prohibited from working as an insolvency practitioner towards other bankruptcy cases.

These rules are strict mandatory guidelines that need to be followed throughout the period of your bankruptcy; any deviation from these is liable to criminal prosecution. In case of any clarifications or issues, there are many non-profitable organizations that you can resort to for free counselling and advice.

Talking of these strict restrictions, the next thought is when do these end? These regulations normally last for a period of 12 months which is the normal discharge period from your bankruptcy. But in certain cases where you have failed to establish an honest relation with the official receiver or have been found guilty of criminal charges, these restrictions can be carried on for a minimum of 2 years to a maximum of 15 years. These restrictions can also be prolonged in case your bankruptcy has been due to dishonest behaviour or other criminal reasons. Certain reasons like becoming bankrupt consecutively twice in a period of six years, low value sale of assets, debts incurred in spite of knowing about your inability to pay, excessive debts taken for purpose of business or modification of data to procure credit are few for which your bankruptcy restrictions term maybe prolonged.

Process involved in extension of bankruptcy restrictions

The official receiver analyses the way reasons of your bankruptcy and communicates these to the court through his report. To prepare his report, you might be required to provide him with copies of your bank statements, financial application forms and correspondence letters with the creditor to prove your behaviour and intention behind these debts. It is also an untold expectation from your side to completely co-operate with the official receiver to ensure fast and smooth processing.

The official receiver might need to send his report to the court within 12 months from the date of your bankruptcy declaration and anything beyond that will be rejected by the court. The official receiver will provide a copy of his report to you and you are expected to acknowledge receipt within a period of 14 days. The acknowledgement to the court can be done in person or by drafting a letter to the court. Once acknowledged, you will be asked to agree upon the extension of the restrictions by the official receiver. Once you accept the extension, he may send you a drafted agreement known as the Bankruptcy Restrictions Undertaking (BRU) which is a mutual agreement for extension without the court intervention. These kinds of agreements may also lead to reduction of the extension term due to your co-operation. There might be situation when an individual might not accept to the extension and in such cases; he can apply in the court for which the court might send him a Bankruptcy Restrictions Order (BRO).

Once the extension conditions are sent over to the court, it may decide on agreeing to the Bankruptcy Restrictions Undertaking or issue you a Bankruptcy Restrictions Order depending on its decision. At times the court may even reject a request from the official receiver to send you a Bankruptcy Restrictions Order or can prolong or postpone the case requesting for more detailed information. It is hence the court that finally determines the extension of the restrictions though recommended by the official receiver.

Publishing of your bankruptcy restrictions

It is a general procedure to bring your Bankruptcy Restrictions Order or Undertaking to public attention. This is done by publishing your details in the Individual Insolvency Register or local newspaper that report bankruptcies. Additionally they are also published in the ‘London gazette’ which normally deals with such legal notices. The details normally published are your name, address and the extended duration of the bankruptcy restrictions.

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