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What happens after discharge from bankruptcy?

A dramatic picture of lightening caused by a discharge of electricity - but discharge from bankruptcy is quiet and low key

A reader asked:

I went bankrupt in 2021 and was discharged a year later. I am not paying an IPA. My question is about savings. Can I save now without any risk of my savings being taken from me?

Also my grandmother wants to give me a large sum of money but I’m not sure if it would be safe so the last thing I want is for her to lose money, so I’ve been reluctant to do it.

This article looks in detail at what happens when you are discharged from bankruptcy: the practicalities, the implications for savings and gifts and the restrictions that end after discharge.

Discharge is almost always after 12 months

Almost everyone is discharged from bankruptcy automatically 12 months after the date they went bankrupt.

During these 12 months when you are bankrupt, you have to co-operate with the Official Receiver (OR) and give information when asked to do so.

If you don’t co-operate, the OR may ask the court to suspend your discharge  – so you won’t be discharged at the end of the 12 months.

This is very rare and you will know if this happens.It isn’t done in secret.

Don’t worry about the remote possibility that you won’t be discharged The OR doesn’t expect you to have a perfect memory or receipts for everything bought over the last five years. “Not co-operating” means refusing to answer questions or not telling the OR the truth.

In the unusual case where your discharge from bankruptcy is suspended, you will be told by the court whether you have to do anything in order to get your discharge. If you don’t understand what is happening or you can’t do what you have been asked, talk to your local Citizens Advice about what your options are.  Do not ignore this problem as it won’t go away.

Discharge day – nothing happens!

You may have had the day ringed in your diary for months, but nothing visibly happens when you are discharged!

You don’t get a certificate or even an email from the OR.

If you haven’t heard anything from the OR about your discharge being suspended you can safely assume that you have been discharged.

Getting confirmation that you have been discharged

You can ask for a confirmation letter that you have been discharged from the Insolvency Service by emailing them at discharge.queries@insolvency.gov.uk – this is free.

Some lenders, especially mortgage lenders, may ask for a Certificate of Discharge.

How you get this depends on how you went bankrupt:

  • if you applied for bankruptcy online email the Insolvency Service at discharge.queries@insolvency.gov.uk and ask for a Certificate of Discharge. This is free.
  • if you were made bankrupt by a creditor – complete form LOC013 and send it with a cheque payable to ‘HM Courts and Tribunals Service’ to the court that made you bankrupt. It costs £70 for three copies of your Certificate of Discharge and £10 for additional extra copies.

What happens when you are discharged

Release from your debts

When you are discharged you are released from the debts that were included in your bankruptcy. These includes any debts you forgot to put on your bankruptcy application form. It doesn’t apply to debts such as student loans which couldn’t form part of your bankruptcy.

Your bankruptcy ends, you are no longer bankrupt!

Things you no longer have to tell the OR about

After discharge, you don’t have to tell the OR about assets or money that you receive, unless you were already entitled to these before your discharge.

The events you no longer have to tell the OR about include:

There is a small exception here if you are paying an IPA/IPO, see below.

So the reader can safely be given money by her grandmother – it won’t be at risk at all.

And she can save as much as wants. She could have saved a small emergency fund before discharge, but few people can afford to save much at that point.

Bankruptcy restrictions that end

The restrictions of bankruptcy also end when you are discharged, unless you have a BRO/BRU, see below, so you will be able to:

  • borrow more than £500 without telling the lender you are bankrupt (but if a lender asks if you have ever been bankrupt or insolvent, you still have to reply Yes);
  • be a company director;
  • change the name of your business if you’re self-employed; and
  • buy a council house using the ‘right to buy’ scheme.

BRO/BRUs – restrictions still apply

The government says “Any dishonest or blameworthy behaviour could lead to a BRO”. 

That may sound alarming because most people who go bankrupt think they have been blameworthy to some extent…

But in practice very few people get BRO/BRUs. See Will you get a Bankruptcy Restriction Order (BRO)? Does it matter? for details.

If the OR has imposed a Bankruptcy Restriction Order (BRO), or you have agreed to a Bankruptcy Restriction Undertaking (BRU) you will still be discharged after twelve months and released from your debts.

But a BRO/BRU means you will continue to have a series of restrictions on what you can do for the period of your BRO/BRU.

Your possessions and assets

Personal possessions – normally safe!

Most people do not lose any personal possessions when they go bankrupt, see Will I lose my lawnmower? and other questions for details.

Most assets apart from your home that have to be sold are dealt with within the twelve month bankruptcy period.

In the unusual situation that you have assets that the OR has told you within the 12 months that may have to be sold, this still applies after discharge.

If you have not heard anything from the OR by the time you are discharged, that is the end. You will not be asked anything afterwards and nothing can be taken.

Family home

There’s a 3-year time limit for the OR to start legal action to sell the family home. If your share of the equity (or your “beneficial interest”) is less than £1,000 three years after you went bankrupt, no action will be taken, the interest will return to you and the restriction at Land Registry will be removed.

“The right to claim something” –  an asset that still belongs to the OR

Sometimes you have a legal right to do something, for example make an insurance claim, ask for a refund, sue someone.

If you had this legal right before you went bankrupt, this right is an asset that transferred to the OR when you went bankrupt. It does not transfer back to you when you are discharged,

This may include any ongoing complaints and court cases, and also ones which have not yet been started.

That last point may be a disappointment. There is no point in you asking for a refund eg by making an affordability complaint for loans taken prior to your bankruptcy because if you win the complaint the money will go to the OR, not to you.

It doesn’t matter if these loans were included in your bankruptcy or had already been repaid, you will not get these refunds.

But  you can make an affordability complaint about credit given after your discharge – then the money will come to you, not the OR. Any refunds for the loans before your bankruptcy will go to the OR.

IPA/IPOs – must be set up before discharge

If you don’t have an IPA/IPO

More than 80% of people who go bankrupt do not have an Income Payments Agreement (IPA) or an Income Payments Order (IPOs)  set.

If you don’t have an IPA when you are discharged one can’t be set up later and you don’t have to tell the OR about any changes to your income or expenses.

(There is a very rare exception. When the OR has applied to court for an IPO before your discharge, then it can be set up afterwards. If this affects you, you will know about it.)

IPAs/IPOs carry on after discharge

Here you have to make monthly payments to the Official Receiver for three years from the point it was set up. During these three years, you have to tell the OR about changes to your income and expenses and the IPA may be adjusted.

Being discharged doesn’t change this.

You should also tell the OR about any windfalls that you receive after your discharge while your IPA is continuing.

This does not mean that the OR can claim your redundancy money or an inheritance where the death happens after you were discharged – this won’t happen, see the links above.

But some windfalls are actually a form of income, for example a refund from the tax man, and you may need to pay a lump sum to the OR for these.

Your credit record after discharge

The details of your bankruptcy are kept on the Individual Insolvency Register for three months after discharge. If you check the register after this, your name should no longer appear, unless you have a BRO/BRU.

Your credit rating won’t improve immediately after you are discharged.

It will take some weeks or even a month or two for creditors to mark your debts as settled/partially settled with a zero balance owing and the bankruptcy marker itself will remain on your file for another five years.

After a few months, you can start the credit repair process, including getting creditors to correct any records which are wrong. See How to repair your credit record after bankruptcy for details.

“What about… ?”

The Insolvency Service helpline can answer general questions, but if you have questions about your specific case, the best thing to do is to contact your OR’s office.

More Debt Camel articles:

Bankruptcy & a new job or overtime

What happens when? A bankruptcy timeline

What happens when? A bankruptcy timeline

How can you start to save small amounts?

Comments

  2. Miles says

    I declared bankruptcy on Feb 2 2021. My mother died on Feb 21 2022, over one year later. The solicitor is now telling me that they have to write to the trustee because I was bankrupt which may prevent my inheritance coming to me.
    I know that the date of death is what is important here, but can I safely assume that I was discharged on Feb 3 2022, meaning my mother died after my discharge? I have not been notified of anything untoward from the receiver at all over the course of the last two years, so assumed I was discharged 12 months on from the original application and order. They would have to let you know if you weren’t discharged 12 months on, right?
    I have asked for a letter confirming discharge, but not received, but I am very worried for my family.

    Reply

    • Sara (Debt Camel) says

      It seems very very likely that you were discharged after a year. How long ago did you ask for a letter confirming this?

      Reply

      • Miles says

        Hi, thanks for getting back to me.

        It was only today I asked for a letter. The auto replied said I could expect it within 5 days.

        All this has happened today. I’m trying to find out as much as possible. I’m extremely anxious about this in all honesty. Thanks again.

        So, I would have been told if it had been extended for any reason?

        Reply

        • Sara (Debt Camel) says

          The OR has to go to court to suspend a discharge. It is very very unlikely this has happened without you knowing about it.

          I understand why this is making you feel anxious. But from what you have said, the solicitor is just doing their job by checking and will be told that you have been discharged from bankrupty.

          Reply

  3. Miles says

    Thank you so much for your advice, Sara.

    So, there relationship has been fractious with this solicitor to say the least (they evicted my family from our home and caused us great anxiety and cost – the house belonged to my mother and we were removed). I am confident they/the executors will do anything they can to prevent my family receiving as much of the inheritance as possible.

    I am heartened by your advice but my concern is that the discharge date (2.2.22) is so close to the date of death (21.2.22) that I wondered if there could have been be a brief extension (if perhaps something wasn’t sorted) that I wasn’t told about, meaning the discharge date exceeded the date. From what you’ve told me however, that seems unlikely.

    Reply

  4. Miles says

    Thanks again Sara. Actually, I received an official report from Experian today which listed my discharge date as 3.2.22. Still awaiting the letter from the receiver, but this is a pretty good indicator that my discharge date preceded my mother’s death, would you say? Thank you.

    Reply

  5. Celio says

    Hi, I’m so confused I went bankruptcy on 9 of june 22 last year after 6 months they gave me a Form23 to see in what I spending and see how I get on, I’ve been fully cooperate with them.
    Now on 2 of july 23 they sent me a form 23 again, is normal this situation?
    I was thinking I’m getting distarge after 12 months.
    I’m so confused and extress about it .
    Thank you

    Reply

  6. Gemma says

    Hi my husband went bankrupt over 15 years ago , he has just applied for a tax refund and it is showing it has been paid to the official receiver and we don’t know why or who this is

    Reply

    • Gemma says

      Well we assumed so it was that long ago he doesn’t have any letters now but I thought you were discharged after so long anyway

      Reply

      • Sara (Debt Camel) says

        does he have any record at all of his bankruptcy, eg the date, court he went bankrupt at (it will have been before online applications), bankruptcy number, the town where the OR’s office was?

        Reply

    • Gemma says

      It was we think January 2003/4 it was at our local magistrate court and dealt with by the Blackpool office that’s all we know but he’s not had any letters to say anything was wrong etc

      Reply

      • Sara (Debt Camel) says

        Ok, so I suggest he contacts the Blackpool Official Receiver office by emailing Birkenhead.OR@insolvency.gov.uk.

        Explain that you bankruptcy is very old, probably 20023-4, and so far as you know you were discharged and have received no communications since. But you have now been told that a tax refund has been paid to the official receiver – attaché details of this. Ask them why this has happened.

        Reply

  7. Keith says

    Hi there
    I was made bankrupt in 2019 and discharged in 2020. I owned a flat before my bankruptcy which had a large loan on it and thus virtually no equity which I rented it to my daughter in law. The receiver is no longer corresponding with me and has not taken steps for legal ownership or taken legal ownership. How do I get this flat back as there is still a charge on it?
    Best regards
    Keith

    Reply

    • Keith says

      The flat had a charge on it by the lender but due to Land Registry having such a back log it was a little confusing, however it still stands.
      The OR also placed a charge on the property so I cannot do anything with it until this is removed. I was under the impression that since they have done nothing else regarding this and it has nearly been five years since my bankruptcy I should be able to have this charge removed?

      Reply

    • Sara (Debt Camel) says

      The placing of a charge by the OR protects their interest in the property.
      I suggest you talk to National Debtline on 0808 808 4000 about this – is there is little or no equity you may be able to purcahse it back from the OR.

      Reply

  8. Steve says

    Hi Sara,

    I was discharged from my bankruptcy yesterday and am keen to take “baby steps” to try and start to rebuild my credit score. I have so far been rejected for a phone contract (sim only) so am assuming that I will need to wait for a few months for things to settle prior to trying to build things. I have registered with all 3 of the major credit agencies and, weirdly, my Experian score is 998/999 – the TransUnion & Equifax ones are both under 500 – is there any reason for that/something I should address?

    Thanks

    Reply

    • Sara (Debt Camel) says

      My guess is the Experian score has not correctly found your bankruptcy, or indeed anything much at all. Get your statutory credit report from Experian and it probably shows very little.

      I suggest sitting back and waiting for three or four months to give creditors a chance to mark the records as satisfied or partially satisfied, see https://debtcamel.co.uk/credit-file-after-bankruptcy/. There is no point in rushing this, you will just waste your time.

      Reply

  9. Ariel Down says

    My husband had tax code NT after has been released bankruptcy , with the new employer, so now the HMRC says he ones tax for last year April 2023-April 2024.
    Is this correct?
    Why the employer didn’t taxed him in time? If so

    Reply

  10. Sam Jones says

    Hi Sara. Lloyds Bank had an incorrect default date, several months late, on a credit card. I got them to correct this recently to date of bankruptcy (Feb 2018). However, my bankruptcy was over 6 yrs ago so that change by Lloyds to correct it is not much use to me now. But my issue now is that Lloyds kept reporting an actual live balance on my account which was reflected in total amounts I owed for the past 6 yrs (not just a default amount or settled etc) but an actual amount showing I still owed them which I believe affected my obtaining credit etc all this time since. I complained to Lloyds but they said because I didn’t send them a certificate of discharge then they were right to keep reporting it as a continual default because they couldn’t mark it as partially settled or anything. My point is why is that even relevant? Are Lloyds hiding behind the certificate of discharge issue, blaming me for what I see as their error? A debt at point of bankruptcy can no longer be chased, or classed as my debt can it once ive been discharged? Other creditors didn’t do this after my discharge so why did Lloyds continue to do it for 6 yrs and continually report it to credit ref agencies? It has significantly affected me obtaining finance of any kind for many years. Thank you for your help.

    Reply

    • Sara (Debt Camel) says

      But my issue now is that Lloyds kept reporting an actual live balance on my account
      which account – a bank account? or the credit card account?

      Reply

      • Sam Jones says

        It was on the credit card account. I’ve spoken with Lloyds again who said it was for me to send them discharge certificate and that they followed rules. I said they hadn’t been proactive in ensuring my data was accurate. I didn’t send them discharge certificate as I didn’t have one, but main reason was I understood I wasn’t to contact creditors about it under terms of actual bankruptcy Order?!? In any event, Lloyds are saying its my fault they kept reporting a live balance for 6 yrs because I didn’t send them the discharge certificate. I spoke with ICO about it, who seem to think Lloyds should have been proactive in seeking that info from me in order to keep my data accurate but Lloyds having none of it and just tell me to go to FOS.

        Reply

        • Sara (Debt Camel) says

          but Lloyds have added a default date of February 2018 to the credit card record – so it should have dropped off the credit reports?

          Reply

  11. Sam Jones says

    Yes it has come off some of CRAs as I have chased it up with them as well., so going forward applying for credit mught be better but my question though is around the 6 years of problems I had with this and impact on me financially and mentally. I know credit score etc wasn’t good with a BO recorded but as time went on this negative impact will have lessened on my credit file. Its about how Lloyds not reporting it correctly in my view, has affected me, but I wanted to know the actual law maybe around them doing this, it just isn’t right for them to do this for 6 yrs as a live balance is it?

    Reply

    • Sara (Debt Camel) says

      Your credit score would not have improved at all if they had added the default correctly and also marked the debt as cleared when you were discharged.
      This is all annoying, but Lloyds have corrected it when you told them about it.

      Reply

  12. Louise jones says

    I have incurred a debt during bankruptcy through no fault of my own. I sold on Ebay and customer has lied about product but Ebay is taking their side. I was made bankrupt just over a year ago. Do I have to pay the debt or is it covered by bankruptcy?
    Many thanks

    Reply

    • Sara (Debt Camel) says

      Bankruptcy only covers debts that you owed/were liable for at the date you went Bankrupt. Not this one.

      Reply

  13. Paula says

    I went bankrupt in December 2018 and was discharged after 12 months. Yet, my credit reports still show debt balances for the accounts included in my bankruptcy. I’m unable to get any form of credit because of this. Is there anything I can do?

    Reply

  14. Jake says

    Hi Sara, I went bankrupt in July 2023 and was automatically discharged in July 2024. forgot to include a creditor in my bankruptcy application. They claim I still owe them because they are not listed in he bankruptcy order. I informed them by email after I was bankrupt in August 2023 with a link to the insolvency register. Do I have to pay them?

    Reply

  15. Jake says

    Zable credit card write: Would you be able to provide us with a copy of the bankruptcy order that shows Zable as a creditor? Looking at the document you have sent over we do not appear on it. Once we have this we can amend the start date and then look to write off the account and mark as satisfied. I notified them after the bankruptcy and had this response: I can confirm we have now located your arrangement on the insolvency register and your account has been updated accordingly. However, I keep getting monthly statements saying I failed to make payments and threating legal actions.

    Reply

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