What is an Undischarged Bankrupt?
When you are made bankrupt you may come across terms you are unfamiliar with. In this article, we’ll take a closer look at what it means to be an ‘undischarged bankrupt’ and how long you’re likely to face restrictions due to your bankruptcy.
Bankruptcy can be a viable option if you’re unable to pay your debts or meet your financial obligations, but there are many factors that you’ll need to consider before you decide whether to apply for bankruptcy or whether to annul an existing bankruptcy.
Sadly, many people are unaware of all the implications of bankruptcy, which means they don’t fully understand what the bankruptcy process involves or what restrictions they will face after being declared bankrupt.
If you are in the process of bankruptcy and need any help then contact Asset Solutions for a consultation.
What Does Undischarged Bankrupt Mean?
If you’re considering applying for bankruptcy, you’ll come across this term frequently, but what is an undischarged bankrupt and who does it apply to? In simple terms, an undischarged bankrupt is an individual who has been declared bankrupt and who is still subject to the bankruptcy process.
While you are an undischarged bankrupt, you’ll be subject to certain restrictions and, during this time, you won’t be in control of your finances. Instead, The Insolvency Service will appoint an official receiver who will manage your assets and finances on your behalf.
How Does the Bankruptcy Process Work?
If you owe money that you can’t afford to pay back, you can apply for bankruptcy. Alternatively, your creditors may petition the court to have you declared bankrupt so that they can recoup some or all of what they are owed.
If you decide to make yourself bankrupt, an adjudicator from The Insolvency Service will assess the information provided and determine whether you should be declared bankrupt. If so, they will issue a bankruptcy order and it is at this point that you officially become an undischarged bankrupt.
It’s important to remember that the bankruptcy process does differ in Scotland and Northern Ireland, so be sure to access and follow the relevant guidelines for the jurisdiction you’re residing in.
What Are Undischarged Bankruptcy Restrictions?
Once a bankruptcy order is made, the true undischarged bankrupt meaning usually becomes apparent. You’ll be subject to a significant number of restrictions that will be in place until your bankruptcy is either discharged or annulled. These include, but are not limited to:
- Asking for leave of the court (permission from the court) if you want to become a company director.
- Declaring your bankruptcy if you attempt to obtain more than £500 in credit.
- Being unable to act as a charity trustee.
- Handing over assets to your bankruptcy trustee.
- Disclosing your full name if working in a partnership or as a self-employed sole trader.
- Being unable to sit on creditors and liquidation committees.
- Being unable to be a school governor.
As you can see, there are many bankruptcy restrictions that apply while you are an undischarged bankrupt and some of them are fairly surprising. For example, you’ll be unable to purchase a home using the Right to Acquire Scheme while you’re an undischarged bankrupt. Additionally, a bankruptcy will automatically revoke a public service vehicle operator’s licence, if you have one.
While most people expect a bankruptcy order to affect their financial situation, they are often surprised at the far-reaching effects a bankruptcy can have on their personal and/or work life. Due to this, it’s important to fully research the consequences of bankruptcy and seek specialist advice before you decide to apply to the court for a bankruptcy order.
Does Bankruptcy Affect My Job?
Being declared bankrupt and being an undischarged bankrupt can certainly affect your job. In fact, some professions will disqualify you if you are declared bankrupt, so it’s important to be aware of this.
Read more: Does Bankruptcy Affect Your Employment?
If you’re a solicitor, for example, your practising certification is suspended when you are made bankrupt and you are required to apply to The Law Society to lift the suspension. Other job roles that are commonly affected by bankruptcy include:
- Estate agent (self-employed or owner)
- Registered social landlord
- Goods vehicle operator
- Public service vehicle operator
- MOT examiner
In addition to this, some professional bodies have their own requirements regarding bankruptcy notifications, so you’ll need to check whether you are required to notify any organisations once you are declared bankrupt.
How Long Does Undischarged Bankruptcy Last?
In most instances, the bankruptcy period runs for 12 months from the date the bankruptcy order is issued. Following this, you’re likely to be discharged from your bankruptcy, although some restrictions and obligations could still apply.
Of course, the impact of your bankruptcy won’t necessarily cease after 12 months. As your previous financial difficulties and bankruptcy will remain on your credit report, you’ll find that being declared bankrupt will have a long-term impact on your financial situation.
Read more: How long do you stay on the Insolvency Register?
Can I Be an Undischarged Bankrupt for More Than 12 Months?
It’s standard for the undischarged bankruptcy period to last for 12 months but there are some situations in which this will be extended. If you fail to adhere to the terms of your bankruptcy order, for example, the period of your bankruptcy could be extended to reflect this.
I’ve Been Discharged, What Next?
Once your bankruptcy has been discharged, you’ll have the opportunity to begin rebuilding your life. With non-exempt debts officially written off, you can reassess your finances and determine how to restructure your income and expenditure most effectively.
Remember – the terms of your bankruptcy may last longer than the bankruptcy process itself, so bear this in mind when you’re deciding if bankruptcy is right for you. If you are subject to an Income Payment Order (IPO), for example, this may last for longer than the 12-month undischarged bankruptcy period. If so, you’ll need to continue paying a percentage of your income to help clear your debts.
If you’re unsure whether any restrictions or obligations remain after being discharged from bankruptcy, contact the Official Receiver for confirmation and guidance.
Are You an Undischarged Bankrupt?
When you’re dealing with seemingly insurmountable financial problems and your debts keep rising, bankruptcy can seem like the only option. While it can be the right choice for many people, there are other debt solutions to consider too.
As many people fail to ask, what is an undischarged bankrupt, or what are the restrictions of undischarged bankruptcy, they are unprepared for the impact that bankruptcy truly has. However, it’s not too late to remedy the situation.
Even if you’ve already been declared bankrupt, you can apply to have your bankruptcy annulled and mitigate the effects that a bankruptcy order can have on your financial, professional and personal life. To find out more, call Asset Solutions now on 0800 689 3861 and talk to our team today.
