Consequences of bankruptcy

It is a well known consequence that you may lose assets of value. Unfortunately there are also many myths and information on bankruptcy and assets is not very well publicised. You are likely to lose assets of any value that are not exempt and will benefit your bankruptcy estate. Household items are an example of items that are exempt.

• You cannot obtain more than £500 of credit without informing a lender of your bankruptcy
• You cannot be a director of a company without the leave of the court
• You cannot trade under a different name in business without informing those with whom you do business the name in which you were made bankrupt.

If you are found blameworthy or culpable during the bankruptcy investigation then the restriction of bankruptcy may be prolonged for between 2 and 15 years.

An income payments agreement is another consequence of bankruptcy that you will not find much information on. When you declare yourself bankrupt your income and expenditure is assessed. If you are found to have a disposable income then you may be expected to contribute towards your bankruptcy for a period of 3 years. The amount will be 50% to 70% of your surplus income, as determined by the Official Receiver.

One aspect of bankruptcy that you should certainly seek information about is antecedent transactions. In certain cases a trustee in bankruptcy can reverse transactions that have previously taken place. This includes preferring family creditors over others and selling assets for less than their market value prior to your bankruptcy.

Before declaring yourself bankrupt you should seek information on how your job may be affected. Some professions prohibit bankruptcy and if you are in business you will be affected.