Important news - As from 6th April 2010 the cost to petition your own bankruptcy increased from £360 to £450, you will also have the additional court fee of £150 to pay as well. This will make the total cost to go bankrupt £600. Click here for more details

Enterprise Act 2002 -Why change the legislation?

Under the old rules the bankrupt would have been discharged after 2 years if unsecured debts were below £20,000, and 3 years if over 'that amount'. The restrictions placed on the individual included making it a criminal offence for an undischarged bankrupt to

• Obtain credit of £250 or more, either alone or with another person; this also covers obtaining credit by a statement or conduct.
• Managing a Limited company directly or indirectly, or acting as a company director without the leave of the Court.
• Many professionals believed that the old legislation was too draconian and did not reflect on today’s society and needs. For example an individual that has been made redundant from his/her occupation and is unable to secure full time employment thereby preventing him/her for servicing their unsecured debts are, in effect, treated exactly the same as an individual that has been culpable and reckless in their borrowing and who had set out with no intention of ever paying his/her creditors.

What are the key points of the new legislation?

Under the Enterprise Act 2002, those made bankrupt after April 2004, will generally be discharged after 1 year, less in some circumstances for example where the bankrupt has cooperated with the Official Receiver, “OR”, and or Trustee and matters relating to the bankrupt’s conduct and affairs has not been raised by creditors. The OR can file a notice at Court detailing that the investigation of the bankrupt’s affairs has been concluded or is unnecessary. In some instances it is proposed that the bankrupt will be discharged upon the date the notice is filed into court and this could be a matter of weeks.

The bankrupt will not be discharged if there is a Court order suspending his or her discharge. This will be made if the bankrupt has not cooperated with the OR or Trustee in bankruptcy, then the term will be extended.

I am worried that my name will be advertised in the local paper

As from the 6th April 2009 most honest and co-operative consumer bankrupts will not be advertised in the local paper. Those bankrupts that are seen not to co-operate or not reveal all their assets or liabilities may still be advertised, plus any other cases that the Official Receiver feels warrants public interest.

More on this can be found here; Massive unreported change in bankruptcy policy.

Is there any change to assets such as my house?

The assets will still form part of the bankrupt’s estate and will, subject to certain exceptions already in place, be controlled by the OR or Trustee as necessary. The Act however changes the way the dwelling house is dealt with, briefly:

Trustee in bankruptcy has 3 years from the date of bankruptcy to deal with the bankrupt’s interest in his/her sole or principal dwelling house, the bankrupt’s spouse or former spouse, following which period it will revert back to the bankrupt, in other words it will no longer be a part of the bankrupt’s estate unless the trustee;

• applies for an order of sale or possession.
• applies for a charging order to cover the value of the interest.
• realises the interest.
• reaches an amicable agreement with the bankrupt regarding the interest.

What is a Bankruptcy Restriction Order, BRO? 

This is new and imposes restrictions on a bankrupt whose conduct has been negligent or reckless. These will generally apply after the bankrupt has been discharged and can run for between 2 and 15 years. Examples of being negligent or reckless would be gambling, borrowing money knowing you can not afford to repay it, paying off family and friends in preference to the lenders that would feature in your bankruptcy .