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Bankruptcy

Bankruptcy Restriction Order “BRO”

A BRO is an order that can be made against you when you have been made bankrupt and it is found that your behaviour prior to bankruptcy is dishonest, reckless or fraudulent.

A BRO can extend certain restriction of bankruptcy for up to 15 years.

The effects of a BRO includes:-

  • Obtaining credit beyond £500 without Court’s permission is a criminal offence
  • The Bankrupt has to trade in the name under which the they were adjudged bankrupt
  • Prohibition from acting as a director of a limited company

Restrictions will also be placed upto you in your everyday life including but not limited to being unable act as a local councillor or a school governor, exercise a right to buy or be a Member of Parliament in England or Wales.

If a BRO is made against you and you break any of the restrictions, you’ll be committing a criminal offence. You could be fined or even sent to prison.

The period of the BRO will depend on how culpable the bankrupt is deemed to be. As a guide the period for the restrictions is imposed as follows:

  • 2 – 15 years Culpable Behaviour – incurring debt knowing you could not settle it
  • 5 – 10 years Reckless Behaviour – for example racking up debts by gambling
  • 10 – 15 years Dishonest Behaviour – getting involved in fraudulent activities

What can lead to a BRO?

The official receiver can ask the court to look at any of the following behaviour when deciding if a BRO should be made

  • Incurring debts that you knew, or ought to have known, you had no reasonable chance of repaying
  • Giving away assets or selling them at less than their value
  • Deliberately paying off some creditors in preference to others
  • Gambling or making rash speculations or being unreasonably extravagant
  • Failing to keep or produce records that would explain a loss of money or property
  • Behaving fraudulently e.g. giving false details to obtain credit
  • Causing your debts to increase by neglecting your business affairs
  • Failing to supply goods or services that have been paid for (e.g. taking deposits)
  • Carrying on a business when you knew or ought to have known you could not pay your debts
  • Not co-operating with the official receiver or trustee.

https://www.gov.uk/government/publications/bankruptcy-restrictions-orders

When deciding whether to make a BRO, the court and The Official Receiver will look at your behaviour before and after bankruptcy. The length of your BRO depends on how much creditors have lost, your attitude, how aware were you of your situation at the time of the behaviour and the likelihood of you doing it again.

Bankruptcy Restriction Undertaking

If you do get notice from The Official Receiver that they intend applying for a Bankruptcy Restriction Order, you will be provided with a copy of the application to court which sets out what the Official Receiver believes you have done and any supporting evidence.

You need to decide whether you propose to challenge the application or accept the BRO application. Acceptance can mean that the term of the restriction is less than the term the court is likely to determine. The acceptance is effectively agreeing to a Bankruptcy Restriction Undertaking BRU and the details go onto the public insolvency register until the end of the BRU.

Getting advice on your options if you are facing serious debt issues is vital. The Debt Advisor is able to advise on all options including formal and informal options.

There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on 0800 138 7777 or by visiting their website.