It
is a common misconception that you will lose everything you
own in a bankruptcy, will not be able to work and can not
even hold a bank account.
This
is in fact not always the case.
The
implications of a bankruptcy order are specific to the person
against whom the order is made.
On
the making of a bankruptcy order, all assets of the debtor
then vest in the Official Receiver. These assets must be realised
for the benefit of your creditors.
For most people the bankruptcy is ended one year after the
date on which the bankruptcy order is made. This means that
the "restrictions" referred to below cease to have
effect after the end of the bankruptcy.
Restrictions that apply
in a bankruptcy
You should be aware
that any windfall/inheritance received prior to or during
the life of the bankruptcy, must be paid to the Official Receiver/Trustee
in bankruptcy to contribute towards or satisfy the debts owed
to your creditors. Should the windfall/inheritance exceed
the amount due to your creditors, then the balance will be
returned to you by the Trustee in bankruptcy.
The Trustee must
realise all assets that existed as at the date that the bankruptcy
order was made (Section 283 of the Insolvency Act 1986). For
further information on these assets, see the House, Car, Furniture,
Job, income/expenditure sections. For details of Section 283
please click here.
You may be required
to complete six monthly income and expenditure statements
to determine whether you have any surplus income that could
be paid to the Official Receiver in satisfaction of your debts.
This is called an income payments order. For full details
on this procedure, see the income/expenditure section.
You are not permitted
to obtain credit during the life of the bankruptcy over and
above the sum of £500 without informing the lender that you
are bankrupt. (This includes not only money, but ordering
goods without asking for credit and then failing to pay for
them when they are delivered). Should the lender then wish
to still deal with you, you are within your rights to accept
any offer of credit made.
Should you trade
as a sole trader, you should be aware of the restrictions
that will be imposed as a result of a bankruptcy order being
made.
Subsequent to a
bankruptcy order being made, there is nothing to stop you
from continuing to trade in the capacity of a sole trader.
You must, however, ensure that your invoices, letterheads,
etc carry the name in which you were made bankrupt, i.e. your
personal name and any former trading name. This is to ensure
that creditors can identify you as a potential credit risk.
Although it is permitted for you to use a trading name, you
must ensure that the Official Receiver/Trustee in bankruptcy,
has expressly given you permission to use such a name. You
must, however, ensure that your
personal name is dominantly shown on all trading paperwork.
e.g Jacob
James trading as Somewhere Over The Rainbow.
As a bankrupt,
it is a criminal offence to be concerned (directly or indirectly)
in promoting, forming or managing a company or acting as a
company director without the courts permission, whether formally
appointed as a director or not.
Should you be a
director of a limited company you must resign office immediately.
Should you be a shareholder of the company at the time that
the bankruptcy order was made, your shares in that company
will automatically vest in your Trustee in Bankruptcy as an
asset of the bankruptcy estate.
