Your Bankruptcy Questions Answered

Whilst the Insolvency Service will notify credit agencies of your discharge from bankruptcy, notice of your bankruptcy will stay on your file for a minimum of 6 years from the date of the bankruptcy order. However, your credit score starts to improve from the point the credit agencies receive notification that your bankruptcy has been discharged.

You will be able to own any property you acquire after having obtained a discharge of your bankruptcy, i.e. after one year of your bankruptcy, providing that the source of funds (deposit monies) do not flow from any assets belonging to your “Bankruptcy Estate”. Your bankruptcy estate comprises of all of your assets which you owned at the date of the bankruptcy order being made against you as these pass to the Official Receiver or your Trustee in bankruptcy.

• The bankrupt is entitled to keep hold of all tools, books, vehicles and other items of equipment that are necessary for the bankrupt’s personal use in his business, vacation or employment.
• All clothing, bedding, furniture, household equipment and provisions that are necessary for the basic domestic needs of the bankrupt and his family.

After the court makes a bankruptcy order, the bankrupt is required to attend the Official Receiver to complete a questionnaire (Preliminary Information Questionnaire). This booklet asks for a bankrupt to set out his income, assets and liabilities. The Official Receiver usually records the interview and then decides whether to appoint a Trustee in Bankruptcy to sell assets to pay creditors.

When a person is made bankrupt, his assets pass to the Official Receiver/Trustee in Bankruptcy. This will not affect the ownership of any co-owner, such as a spouse, however they will be unable to sell the property without the Trustee’s permission.

The Official Receiver or Trustee will not sell the family home during the first year of the bankruptcy and have three years from the date of the bankruptcy order to make an application to sell the home. Should the Trustee not make an application in this three year period, the property  reverts back to the bankrupt. However, this three year rule only applies to the family home.