Bankruptcy Restriction Order

	What is a Bankruptcy Restrictions Order? For those who find themselves in debt with no realistic chance of being able to repay it, bankruptcy is an option of last resort, but one that does give the opportunity of starting afresh after a period of a year. However, there are those who are made bankrupt following reckless or dishonest behaviour and courts can impose a Bankruptcy Restrictions Order (BRO) on such individuals. A Bankruptcy Restrictions Order can last from two to 15 years, the length being decided by the court after considering the harm that your actions have caused your creditors. While under a Bankruptcy Restrictions Order, the restrictions that would normally be lifted following your bankruptcy discharge continue. These include: 1. having to disclose your status to a credit provider if you wish to obtain credit of more than £500 2. having to disclose the trading name (or trading style) under which you were made bankrupt to those you wish to do business with 3. not acting as the director of a company or taking part in its promotion, formation or management without the court's permission to do so 4. not being able to act as an insolvency practitioner, or as the receiver or manager of the property of a company on behalf of debenture holders 5. not being able to hold numerous official posts, including those of a local councillor or a Member of Parliament If found guilty of breaching any of the restrictions of your BRO, you could face a fine and even imprisonment. A BRO can be made based on your conduct before and after the date of your bankruptcy order. Examples of behaviour that could lead to a BRO being enforced include: 1. incurring debts that you knew you had no reasonable chance of repaying 2. giving away assets or selling them at less than their value 3. gambling or making rash investments 4. being unreasonably extravagant 5. deliberately paying off some creditors in preference to others ("entering into a preference") - you cannot repay friends or family while ignoring other debts for example 6. failing to keep or produce records that would explain a loss of money or property 7. causing your debts to increase by neglecting your business affairs 8. failing to supply goods or services that have been paid for 9. carrying on a business when you knew or ought to have known you could not pay your debts Before applying for a Bankruptcy Restriction Order, the official receiver or your trustee will write to you with details of the report to be presented to the court and allowing you 21 days to the allegations. You can avoid court proceedings at this point by accepting the details of the report and entering into a Bankruptcy Restrictions Undertaking (BRU). A Bankruptcy Restrictions Undertaking is identical to a Bankruptcy Restrictions Order other than it does avoid going to court and because you are admitting unfit conduct, the period of the BRU is likely to be shorter than if the court made a BRO. When a BRO is made, or you enter into a BRU, details will go into a public register and stay there until the order or undertaking expires. It is also likely to be reported in a press release that will identify you, describe the conduct that brought about the application or intended application, and state the period of the BRO or BRU.

What is a Bankruptcy Restrictions Order?

For those who find themselves in debt with no realistic chance of being able to repay it, bankruptcy is an option of last resort, but one that does give the opportunity of starting afresh after a period of a year.

However, there are those who are made bankrupt following reckless or dishonest behaviour and courts can impose a Bankruptcy Restrictions Order (BRO) on such individuals.

A Bankruptcy Restrictions Order can last from two to 15 years, the length being decided by the court after considering the harm that your actions have caused your creditors.

While under a Bankruptcy Restrictions Order, the restrictions that would normally be lifted following your bankruptcy discharge continue. These include:

1. having to disclose your status to a credit provider if you wish to obtain credit of more than £500

2. having to disclose the trading name (or trading style) under which you were made bankrupt to those you wish to do business with

3. not acting as the director of a company or taking part in its promotion, formation or management without the court's permission to do so

4. not being able to act as an insolvency practitioner, or as the receiver or manager of the property of a company on behalf of debenture holders

5. not being able to hold numerous official posts, including those of a local councillor or a Member of Parliament

If found guilty of breaching any of the restrictions of your BRO, you could face a fine and even imprisonment.

A BRO can be made based on your conduct before and after the date of your bankruptcy order. Examples of behaviour that could lead to a BRO being enforced include:

1. incurring debts that you knew you had no reasonable chance of repaying

2. giving away assets or selling them at less than their value

3. gambling or making rash investments

4. being unreasonably extravagant

5. deliberately paying off some creditors in preference to others ("entering into a preference") - you cannot repay friends or family while ignoring other debts for example

6. failing to keep or produce records that would explain a loss of money or property

7. causing your debts to increase by neglecting your business affairs

8. failing to supply goods or services that have been paid for

9. carrying on a business when you knew or ought to have known you could not pay your debts

Before applying for a Bankruptcy Restriction Order, the official receiver or your trustee will write to you with details of the report to be presented to the court and allowing you 21 days to the allegations.

You can avoid court proceedings at this point by accepting the details of the report and entering into a Bankruptcy Restrictions Undertaking (BRU).

A Bankruptcy Restrictions Undertaking is identical to a Bankruptcy Restrictions Order other than it does avoid going to court and because you are admitting unfit conduct, the period of the BRU is likely to be shorter than if the court made a BRO.

When a BRO is made, or you enter into a BRU, details will go into a public register and stay there until the order or undertaking expires.

It is also likely to be reported in a press release that will identify you, describe the conduct that brought about the application or intended application, and state the period of the BRO or BRU.

© Bankrupt.co.uk 2007. All rights reserved. Please note the contents of this website are for information purposes only and do not constitute financial advice. Please seek independent professional advice before taking action that may affect your financial well-being.