Check the rules after you go bankrupt
While you’re bankrupt, you have to follow certain rules. These rules are called 'restrictions'.
The rules cover things like your job, your money and how you work with the person who deals with your bankruptcy. They’re called the ‘official receiver’.
There are also rules about how you managed your debts before you went bankrupt.
If you don't follow the rules, you might have to follow extra restrictions or stay bankrupt for longer. You might also be prosecuted for committing a bankruptcy offence.
Check what to do after you go bankrupt
You have to co-operate with the official receiver when you’re bankrupt. For example, you should give them the information they ask for.
While you’re bankrupt, you can't:
- get credit of £500 or more without telling the lender that you’ve gone bankrupt
- act as a director or get involved with setting up, promoting or running a company without permission from the court
- do business in a different name from the one under which you were made bankrupt, without telling everyone you do business with the name in which you were made bankrupt
- act as an insolvency practitioner
These things count as bankruptcy offences. A bankruptcy offence is a criminal offence - you could be fined or sent to prison. You can check what to do if the official receiver says you’ve committed a bankruptcy offence.
If your financial situation changes
You must tell the official receiver straight away if:
- your income has gone up or down
- you've received a lump sum payment, for example through an inheritance
- your expenses go up or down - for example if you have a baby
The official receiver might ask you to pay more or less towards your debts. You can check how your payments might change if your circumstances change.
If your change of circumstances means you've paid off all your debts and bankruptcy expenses, such as the official receiver's costs, you can apply to have your bankruptcy cancelled.
If your bankruptcy has ended, you only need to tell the official receiver about a change if you’re still paying an income payments agreement (IPA) or income payments order (IPO).
If you have a bankruptcy restrictions order (BRO) or bankruptcy restrictions undertaking (BRU)
You have to follow some extra restrictions, as well as the other bankruptcy rules. You can check the extra restrictions and what happens after a BRO or BRU is made on GOV.UK.
If you break any bankruptcy rules while you have a BRO or BRU, it counts as a bankruptcy offence. A bankruptcy offence is a criminal offence - you could be fined or sent to prison. You can check what to do if the official receiver says you’ve committed a bankruptcy offence.
Check if you followed the rules before you went bankrupt
After you’ve gone bankrupt, the official receiver checks how you dealt with your finances in the last few years. For example, they check if you:
- paid some debts before others, when you knew you couldn’t pay everything
- gave something away or sold it cheaply to stop the official receiver selling it
- spent or borrowed much more than you needed to
- gave a lender the wrong information so you could get credit
If you paid some debts before others
If you knew you couldn’t pay all your debts, you must have tried to treat all your creditors fairly. For example, you shouldn’t pay back a family member if it means you can’t pay another debt like an energy bill.
The official receiver only checks which debts you paid if:
- you paid a debt when you couldn’t afford the rest of your debts or essential payments, like rent or bills
- paying the debt made it harder for you to afford the rest of your debts and essential payments
If you can’t afford all your debts and essential payments, it’s called being ‘insolvent’.
If you were insolvent, the official receiver checks everyone you paid for 6 months before you went bankrupt.
If you’ve paid back someone you know, the official receiver checks what you paid them for 2 years before you went bankrupt. For example, they’ll check payments to your family, business partners or employees.
If the official receiver decides you broke the rules, they might take the money back from the people you paid.
If you didn’t have a choice about which creditor to pay first, tell the official receiver. They have to take into account if a creditor put pressure on you - for example, if they were threatening court action.
If you gave something away or sold it cheaply
The official receiver usually checks what you gave away or sold for up to 5 years before you went bankrupt.
For the 2 years before you went bankrupt, the official receiver checks everything you gave away or sold.
For 2 to 5 years before you went bankrupt, the official receiver checks what you gave away or sold if either:
- you gave away or sold your belongings to someone you know - like a family member, business partner or employee
- you gave away or sold something when you couldn’t afford the rest of your debts or your essential payments - called being ‘insolvent’
If the official receiver thinks you deliberately gave away or sold your belongings to avoid paying your debts, they’ll check for longer than 5 years.
If they decide you broke the rules, they might take back what you gave away or sold.
If you spent or borrowed more than you needed
The official receiver checks if you:
- took on debts you knew you couldn't repay
- gambled or took big risks with money
- spent much more than you needed to
- made a big pension contribution before you applied for bankruptcy
If you ran your own business, the official receiver also checks how you ran it. For example, they check if you:
- neglected your business
- carried on a business when you knew you couldn't pay your debts - this is called 'trading with knowledge of insolvency'
- failed to keep records which show how you’ve made losses on property or business
- failed to supply goods or services you were paid for - this is called 'taking deposits'
If you gave the wrong information to get credit
The official receiver might decide you gave the wrong information if you:
- told a lender something that wasn’t true
- didn’t tell them something they asked you about
The official receiver has to take your circumstances into account when they decide if you broke the rules. For example, they have to take into account if the lender told you to say you were earning more than you actually were so you could get the loan.
If you’ve broken a rule
If the official receiver thinks you’ve broken a rule, they can apply to the court for:
- a ‘bankruptcy restrictions order’ (BRO)
- an order for you to attend a public examination
- an order to have your mail redirected to the official receiver
- a court hearing to decide if you’ve committed a bankruptcy offence
You can challenge the official receiver’s decision if you think it’s wrong.