Guidance

Restrictions following a bankruptcy order

Published 3 May 2022

Applies to England and Wales

If you have a bankruptcy order, you must follow certain restrictions. The restrictions start once your bankruptcy order is made. They stop once your bankruptcy ends (you are discharged), or if the bankruptcy is annulled (cancelled) before you are discharged.

Further restrictions will apply for an additional 2 to 15 years after you are discharged, if you have a bankruptcy restrictions order or bankruptcy restrictions undertaking.

Bankruptcy restrictions are legal restrictions meant to protect the public and allow you to make a fresh start.

This guidance explains the main consequences of a bankruptcy order and is not a full list. As a bankrupt it is your responsibility to follow restrictions that apply to you.

1. Restrictions under insolvency legislation

1.1 Obtaining credit

If you borrow or obtain £500 or more (for example under a hire purchase or conditional sale agreement), either alone or with another person, you must tell them that you are bankrupt. Failure to disclose your bankruptcy is a criminal offence.

1.2 Working as a self employed sole trader or in partnership

If you are self employed or are going to start your own business (sole trader), you must use the same name the bankruptcy order was made in. Or you must clearly show that name in all correspondence, invoices or advertising.

Failure to disclose your name is a criminal offence.

For example, if Bert Jones, an undischarged bankrupt, wished to start his own business and trade as ‘Cheese Emporium’, he would have to disclose that the proprietor of that business was Bert Jones. You can still trade in partnership, but you must disclose that you are a partner in the business.

1.3 Acting as a company director

You need the permission of the court to act as a company director. This includes directly or indirectly, taking part in, or having a concern in the promotion, formation or management of a limited company.

Acting as a director or managing a company when bankrupt is a criminal offence.

This also applies to membership of a Limited Liability Partnership.

1.4 Absconding with property and possessions

You must hand over the assets (items you own) which make up your bankruptcy estate to your trustee. It is a criminal offence if you abscond (leave, attempt or prepare to leave), England or Wales, with any item belonging to your trustee worth more than £1,000.

1.5 Creditors’ and liquidation committees

You may no longer be a member of a creditors or liquidation committee. If you are a member of one, your bankruptcy trustee will replace you.

You cannot represent another committee member while you are an undischarged bankrupt.

1.6 Insolvency practitioner

You cannot act as an insolvency practitioner while you are an undischarged bankrupt. It is a criminal offence to act as an insolvency practitioner when not qualified to do so.

It is also an offence to act as the manager of a company’s property on behalf of the debenture holders (someone who holds security over company property for the repayment of a debt).

1.7 Enlisting in the police or armed forces

If you enlist in the police or armed forces, you must notify the recruiting officer that you are an undischarged bankrupt.

1.8 Membership of professional bodies

If you are a member of a professional body, contact them to find out if any restrictions apply to you as an undischarged bankrupt.

Your bankruptcy may mean you are subject to disciplinary procedures by your employer under the terms in your contract of employment.

2. Public offices

You may be removed or disqualified from public office, or a committee established under Acts of Parliament. If you have a bankruptcy order made against you, you should seek advice on your ability to continue in office.

2.1 Trustee of a charity

You cannot act as the trustee of a charity.

2.2 Trustee of a pension scheme

You cannot act as the trustee of a pension scheme, unless you apply to the Pensions Regulator for a waiver.

2.3 Registrar of births, deaths and marriages

You cannot be appointed as a registrar of births, deaths and marriages.

3. Education

You may not act as a member of some colleges and further education corporations. You should seek advice from the secretary or chair.

3.1 School governor

You can continue to hold office as a school governor.

4. Financial matters

4.1 Consumer credit licence

If you hold a consumer credit licence or wish to apply for one you must notify the Financial Conduct Authority (FCA) of your bankruptcy. The operation of the licence is a matter for the FCA.

4.2 Individual savings account manager

You can no longer be an individual savings account manager once your bankruptcy order has been made. You must notify the board within 30 days of the order being made.

5. Housing

5.1 Estate agents

You cannot work as a self employed estate agent or as the owner of an estate agency. You can only continue to be an estate agent as an employee of another person.

5.2 Right to Buy

You may rent a property from a local authority, a housing trust or an association which qualifies for the ‘right to buy’ scheme. You cannot use the ‘right to buy’ scheme to purchase the property if you, or anyone else in the property who also qualifies for the ‘right to buy’:

• has a pending bankruptcy petition against them
• has a pending bankruptcy application
• is an undischarged bankrupt

5.3 Registered social landlord

You may be removed as an officer of a registered social landlord.

6. Legal matters

6.1 Lasting power of attorney

You may not act or be appointed as the lasting power of attorney for a donor’s (the person who granted the power of attorney) property and affairs if you are an undischarged bankrupt.

If you are acting as the lasting power of attorney and the donor is made bankrupt, the lasting power of attorney for their property and affairs will be be revoked (cancelled).

6.2 Solicitor

Your practicing certificate will immediately be suspended when a bankruptcy order is made against you. You can apply to The Law Society to lift the suspension.

This restriction is not placed on practicing barristers. As a matter of courtesy, you should inform the Bar Council of your bankruptcy order.

7. Transport

7.1 Goods vehicles operator’s licence

The traffic commissioner may revoke, suspend or cancel your operator’s licence.

7.2 Public service vehicle operator’s licence

Your bankruptcy order will revoke (cancel) your public service vehicle operator’s licence, or road service licence.

7.3 MOT authorised examiner

Your bankruptcy order will revoke (cancel) your authorisation as an MOT examiner. This does not apply to nominated testers.

8. General

Certain jobs or appointments to committees require an assessment to determine that a person if ‘fit and proper’. As an undischarged bankrupt, this may mean you may not be appointed or must resign from a position. It is down to the relevant persons assessing the ‘fit and proper person’ to determine the outcome.