Bankruptcy Restriction Order

If you have broken any of the restrictions placed upon you when you take on bankruptcy – you can find a full list of these here – then you may have a Bankruptcy Restriction Order issued against you. This means that the limitations of a bankruptcy can apply for anything from two to fifteen years.

A Bankruptcy Restriction Order is a legal order created by the court, so it must be taken seriously or you run the risk of further action being taken against you.

Breaking the terms of a Bankruptcy Restriction Order is deemed a criminal offence, so this is something to keep in mind at all times, as you could go to prison for this.

Why might a Bankruptcy Restriction Order be issued against you?

There are a number of rules to follow when you are undischarged bankrupt and, if you break any of these, this can lead to a Bankruptcy Restriction Order being issued.

Here is a list of things the Official Receiver will take into account when considering a Bankruptcy Restriction Order:

1. Breaking any bankruptcy restrictions already in place before you are discharged from your bankruptcy.
2. Giving away any belongings or assets for less than they are worth, five years before you applied for bankruptcy.
3. Trading with knowledge of insolvency – this means continuing to run a business, while knowingly being unable to repay your debts.
4. Gambling or making impulsive monetary decisions.
5. Committing fraud – such as making false claims to borrow money.
6. Failing to cooperate with the Official Receiver dealing with your bankruptcy – this means anything from not giving them information when asked or avoiding contact with them.
7. Taking on debts that you knowingly could not repay.
8. Not paying tax and other debts to HMRC on-time.

What restrictions will be placed on you?

A Bankruptcy Restriction Order keeps all of the usual bankruptcy restrictions in place, as well as a few more:

1. You will be restricted from applying for credit of £500 or more without notifying the creditor that you have a Bankruptcy Restriction Order.
2. You are unable to act as an insolvency practitioner.
3. You won’t be able to act as the director of a company without permission from the court.
4. You cannot create or run a business in a different name to the one you were made bankrupt under.
5. You cannot act as a local councillor, sit on a board of school governors, exercise a ‘right to buy’ property or be a member of parliament for England or Wales.

How does the court decide whether to issue a Bankruptcy Restriction Order?

The length of your Bankruptcy Restriction Order all comes down to how serious the court and Official Receiver believe your actions to be. The court carefully looks into every application made by an Official Receiver but the main things they will consider include:

•  Whether you were aware of what you were doing at the time.
•  What the likelihood is of you doing it again.
•  How much your creditors have lost.
•  Whether the public needs to be protected from your actions.

What happens when a Bankruptcy Restriction Order is created?

Before your discharge date, you will be notified that your restriction period is being extended and the reason why. You will also need to attend a Bankruptcy Restriction Order hearing in court.

Within six weeks of your Official Receiver applying for the Bankruptcy Restriction Order, you should receive a fixed hearing date. It’s important you acknowledge you have received this within 14 days.

You will also be sent details of what you are said to have done wrong and evidence of this. This allows you to consider whether you wish to challenge the Order.

Accepting the allegations and a Bankruptcy Restriction Undertaking

If you accept the allegations made against you then there may be no need to attend a court hearing and a Bankruptcy Restriction Undertaking may be issued against you instead.

This will hold all of the same weight and restrictions of a Bankruptcy Restriction Order but may not last as long, as you have accepted liability.

If you have received a Bankruptcy Restriction Order or believe you may be at risk of receiving one, speak to a member of our team at PayPlan today for free, impartial advice about your situation on 0800 316 1833.