Bankruptcy restrictions orders
Before you're discharged from bankruptcy, you have to follow certain rules. These rules are called 'restrictions' and they cover things like getting credit and your working life.
If the official receiver finds you’ve behaved dishonestly or recklessly, they can ask a court to make a bankruptcy restrictions order (BRO) against you.
A BRO is a legal order from the court which extends the period of time you have to follow certain restrictions to up to 15 years.
What restrictions you'll have to follow
If you get a BRO, the restrictions include the ones you have to follow during the year before you’re discharged from bankruptcy, which say you can't do any of the following:
- get credit of £500 or more without telling the lender that you have a BRO
- act as a director or get involved with setting up, promoting or running a company without permission from the court
- carry on a business in a different name from the one under which you were made bankrupt, without telling everyone you do business with the name in which you were made bankrupt
- act as an insolvency practitioner
With a BRO, you also have to follow some extra restrictions. You can read a full list of the extra restrictions on GOV.UK. Things you can't do include:
- acting as a local councillor
- being a school governor
- holding certain other positions in associations, governing bodies or professions
- exercising any 'right to buy'
- being a Member of Parliament in England or Wales
Other consequences of a BRO
As well as the restrictions a BRO places upon you, there are other consequences for you if a BRO is made. These include:
- your creditors will be told about the BRO
- the court will issue a press notice about your BRO, which the local newspapers and media can publish if they wish to
- your details will appear on the publicly available insolvency register, which any member of the public can view
- details of your BRO may also be published on the Insolvency Services Restrictions Outcomes website
When you might get a BRO
The official receiver can ask the court to give you a BRO if it believes you’ve acted dishonestly or recklessly before or after you were made bankrupt.
When deciding whether to give you a BRO, the court can take any behaviour into account.
A court might give you a BRO if you chose to pay off some of your creditors before others in the 6 months before bankruptcy - or 2 years if the creditors are your ‘associates’. Your associates include your family members, business partners or employees.
If your creditors aren’t your associates, you might be able to argue you didn’t have a choice about which creditor to pay first - for example, if they were threatening court action.
A court will also check if you gave away or sold your belongings for less than they’re worth. If you did this in the 2 years before bankruptcy, the court might give you a BRO. If you did this in the 5 years before bankruptcy, the court might give you a BRO if either:
you gave away or sold your belongings to your associates
you were ‘insolvent’ at the time of the transaction
You’re insolvent if your debts are bigger than the value of your assets, or if you can’t afford your liabilities - for example, your rent or bills.
The court might also give you a BRO if you’ve:
- broken any of the restrictions that were placed on you before your discharge from bankruptcy
- failed to keep records which show how you’ve made losses on property or business
- made an excessive pension contribution before you applied for bankruptcy
- failed to supply goods or services you've been paid for - this is called 'taking deposits'
- carried on a business when you knew you couldn't pay your debts - this is called 'trading with knowledge of insolvency'
- taken on debts you couldn't repay
- gambled, made rash speculations or been unreasonably extravagant
- neglected your business, causing your debts to increase
- fraud, such as making a false claim to obtain credit
- committed a bankruptcy offence, which may also carry further consequences as these count as criminal offences
- not cooperated with the official receiver or bankruptcy trustee
The court will also consider whether you’ve been bankrupt at any point in the last 6 years. On its own, this wouldn’t be a reason to make a BRO against you, but it would give the court an idea of how you’d managed your financial situation over recent years.
If you break any of the BRO restrictions
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.
If you've got a BRO and have broken any of the restrictions, you should get advice as soon as possible.
If you've received a notice of a BRO court hearing
If you receive a notice of a BRO court hearing, you can choose to accept the allegations or to challenge them.
- Check what to do if you've had notice of a BRO court hearing
- If you need more help, you can talk to an adviser
You can find out more about bankruptcy restrictions orders on GOV.UK.