A reader asked:
I was declared bankrupt in October 2012 and discharged 1 year after. My question is about savings. Can I save now without any risk of my savings being taken from me? Also my grandmother wants to put a large sum of money in my name 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 (answering the reader’s questions) and the restrictions that end after discharge.
When do you get discharged?
Almost everyone is discharged 12 months after the date they went bankrupt. (Before 2013 you could get an “early discharge”, but this was ended.)
During the year you are bankrupt, you have to co-operate with the Official Receiver (OR) and give information when asked to do so. The OR isn’t going to expect you to have a perfect memory or receipts for everything bought over the last five years
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. If 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.
What happens when you are discharged
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.
When you are discharged you are released from your debts (except for any which couldn’t form part of your bankruptcy such as student loans.) Your bankruptcy ends, you are no longer bankrupt!
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, see below. The events you no longer have to tell the OR about include:
- receiving redundancy money (see Redundancy and bankruptcy);
- getting an inheritance (see Inheriting money when bankrupt); and
- a pension lump sum or money you withdrew from a pension (see Bankruptcy and Pensions).
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 in practice few people can afford to save much at that point.
The various 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.
Any existing assets may still be sold/claimed by the OR
If you have assets that the OR has told you may have to be sold, then this still applies after discharge. Most assets apart from your home that have to be sold are dealt with within the twelve month bankruptcy period.
There’s a 3-year time limit for selling 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.
NB Most people do not lose any personal possessions when they go bankrupt, see Will I lose my lawnmower? and other questions for details.
This also applies where you have had the right to an asset before your discharge. This can include an ongoing court or insurance case where you may later receive a payout, a distribution from a will where the person died before you were discharged and any PPI or similar reclaims.
That last point surprises and disappoints many people. There is no point in you making a complaint about PPI mis-selling after your discharge because the money will go to the OR, not to you. This is because legally you had the right to make a PPI claim at the point you went bankrupt, so that right is an asset which became the property of the OR when you went bankrupt.
BRO/BRUs – restrictions still apply
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 released from your debts, but you will continue to have a series of restrictions on what you can do for the period of your BRO/BRU.
The government says “Any dishonest or blameworthy behaviour could lead to a BRO” – but most people who go bankrupt think they have been blameworthy to some extent, so it’s important to emphasis that not many people get BRO/BRUs.
IPA/IPOs carry on after discharge
If you have an Income Payments Agreement (IPA) or an Income Payments Order (IPO), you have to make monthly payments to the Official Receiver for three years from the point it was set up. During these three year you have to tell the OR about changes to your income and expenses and the IPA/IPO may be adjusted. Being discharged doesn’t change this.
If you don’t have an IPA/IPO when you are discharged – and more then 80% of people don’t – 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 rare exception – if the OR has applied to court for an IPO before your discharge, then it can be set up afterwards.)
Getting confirmation that you have been discharged
You can ask for a letter from the OR’s office saying that you have been discharged – this is free.
Some lenders, especially mortgage lenders, will want to see a Certificate of Discharge. To get this you need to 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.
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.
What happens to your credit record on discharge?
Your credit rating won’t improve immediately 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 any questions about your specific case, the best thing to do is to contact your OR’s office.
The Insolvency Service helpline
Repairing your credit after bankruptcy
What happens when? A bankruptcy timeline
Jordan says
How does the official reviever or trustee know if you are changing jobs? I read everywhere that you notify them but surely they find out anyway?
Sara (Debt Camel) says
Hi Jordan, the simple answer is you should promptly notify them. If you don’t they are very likely to find out anyway because when you go bankrupt you have to sign a tax and national insurance disclosure form, which allows HMRC to pass information to the Official Receiver. this information will include the change of tax code when you change jobs.
Jan says
I became bankrupt in April with an IPA running for 36 months. What happens if I inherit property after my discharge but before the end of my IPA. Would I lose the property or is it untouchable at that point ?
Sara (Debt Camel) says
After your discharge that will be safe, see https://debtcamel.co.uk/inherit-money-bankrupt/
DC says
Hi, I was made bankrupt in 2010 and, as far as I can see am expecting it to be off my record in a couple of weeks time. The question that keeps coming to mind (and I find conflicting views on) is when confronted with the question “have you ever been made bankrupt? do I still have to answer yes even after it’s all cleared from my record?
Sara (Debt Camel) says
You do have to answer Yes.
Simon says
Hi Sara, your site is excellent. The one question I cannot find the answer to however is how the bankruptcy option ‘more-permanently’ affects your ability to get a mortgage after the 6 years when it is struck permanently from your record (vs. say a DMP).
Does your answer above identity this i.e. even after the 6 years you will always still have to answer ‘yes’ irrespective of the credit repair work since?
Sara (Debt Camel) says
You do have to answer questions such as “Have you ever been bankrupt or in an IVA?” accurately. This article https://debtcamel.co.uk/bankruptcy-iva-dro-credit-rating/ looks at the issue of later mortgages in more detail.
Alice says
Hi, I was made bankrupt in May 2015 when does my name come off the insolvency register?
Sara (Debt Camel) says
If you were discharged after a year – and as this article says, almost everyone is – then your name will have come off the insolvency register 3 months later. So it should be gone by now or in the next week or so.
Penny says
Hi – I was made bankrupt on 14 March 2014. I was told I would be discharged after one year automatically and my name does not appear on the Insolvency register as at 26 October 2016. However, I have received a letter from someone saying they have been appointed as the Trustee of my estate by the Secretary of State with effect from 18 October 2016. He has also enclosed a “questionnaire for Undischarged Bankrupts”. What does this mean, what will happen and they are asking questions about the family home. This is mortgaged, with a mortgage outstanding of £311,000 and an approximate value of £250,000 – £275,000. It is jointly owned by my husband and me and we have two children aged 12 and 13 currently. I am concerned!
Sara (Debt Camel) says
It sounds as though there is a lot of negative equity. If this is still the case three years after you went bankrupt, the house should revert to you and will be safe. In the meanwhile, I suggest you ask why you have been sent a form for undischarged bankrupts when you have been discharged.
Joseph says
One Has Read Through Many Of The Questions Sent To You And I Am Very Grateful For The Responses You Have Given Them. Bankruptcy Is A Lonely Place To Be And Having Just Applied For A Certificate Of Discharge All Your Answers Have Placed Me In A Better Frame Of Mind. Thank You.
Sarah says
It will be one year next week when I declared myself bankrupt. I still haven’t heard from the OR regarding a IPA. Should I still expect one to be issued
Sara (Debt Camel) says
Were you expecting to get an IPA? 80%+ of people don’t pay one. After your discharge next week, one can’t be set up, so your OR is cutting it a bit fine!
Sarah says
I filled in then I & E when I first declared myself bankrupt. Sent everything back and I’ve never heard anything since. I’ve been in such a state worrying about it ever since. It’s the anniversary on the 19/11. I’ve another week of worrying but knowing my luck I will get a letter next week
Chris says
If the mortgage is solely in my name but my wife and i moved in together 11 years ago will the house be classed as both of ours as she has paid 50% of all household bills including the mortgage since day one? If i have to go bankrupt can she buy my share of the equity and take on the mortgage in her name so the house is safe?
Sara (Debt Camel) says
Were you already living in the house when she moved in? If not, when you bought the house, where did the deposit come from?
PAUL MORGAN says
I was made bankrupt in 29/12/2011 and then discharged in 29/12/2012, also I am off the Insolvency website.
I was paying my official receiver £109.00 a month from 14/02/2013 to 14/01/2016 (3 years)
I then applied on 14/11/2016 for PPI from my bank Lloyds TSB which I was awarded £660.00 on 04/12/2016,
But because they said my financial affairs are being managed by an Insolvency practitioner, therefore the offered re-addressed payment will normally be an asset of my arrangement, and have made my payments directly to my Insolvency officer !
But I haven’t heard a thing of my Insolvency officer as of yet to tell me this,
Can they keep this money from me from my bank ? ? ?
Sara (Debt Camel) says
Yes, as you have been bankrupt any PPI reclaim will go to the Official Receiver. The only exception is if you had taken out credit with PPI after you had been discharged. See https://debtcamel.co.uk/ppi-iva-dro-bankruptcy/
James says
I’ve been discharged from bancrupcy 7 months now but I’m in a IPA am I allowed to get a credit card to start building up my credit score
Sara (Debt Camel) says
Yes, you can now borrow money as you are free from the bankruptcy restrictions. Read https://debtcamel.co.uk/credit-file-after-bankruptcy/ and also https://debtcamel.co.uk/bad-credit-cards/.
Hayley says
Hi, I was declared bankrupt in October 2015 so am now discharged. I intend to start an insurance qualification which my employer is paying for. I have advised them about my bankruptcy and they want to know everything about it and have asked for a copy of the discharge certificate but from looking through your very useful website, it appears that no certificate is produced, is that right? Also, if I inherit money or assets once I’ve been discharged, do I even need to tell the insolvency service as I believe any money I inherit I can keep? Thank you.
Sara (Debt Camel) says
You don’t automatically get a certificate. You can ask your OR for a letter confirming your discharge – that will probably be fine for your employer.
If you inherit now, it is all yours – providing that the death occurred after your discharge, as the above article explains.
Katie says
Hi I need some advise, I have recently completed bankruptcy application online. And told on the 20th that I have been declared bankrupt however have not yet had a telephone conversation with the or. My concern is that over the weekend me and my ex have decided to give things another go we have been split up for 7 months. We have 2 children and the only joint debt we have is a tax credit overpayment. We have not yet decided when he will move back into the family home he is currently private renting. Do I need to Inform the or that he may move in in the near future? My personal income will drop down to tax credits and cb only as I am not working so will be roughly 400 a month. He works full time and but is currently in a debt management plan. I am worried that by him moving back home I will loose my bankruptcy. We have talked and agreed that I would contribute to the housekeeping and fuel as he doesn’t drive. I do want to give my family another go but i am so worried that it will ruin my bankruptcy thanks
Sara (Debt Camel) says
You don’t need to tell the OR anything until your income & expenditure change ie not until he does move in.
At that point your expenses will drop (as he will be paying some of them) but your income also will as well. If your only income comes from benefits there is no danger that you will have to make monthly payments and the OR is not going to be very interested in the detailed calculations, but you should still tell the OR what is happening.
You can’t “loose” your bankruptcy. He is not going to be responsbile for your debts. I don’t know how big his debts are, but if his DMP is going to take many years, perhaps he too should be looking at insolvency?
PS some things matter more than money – I hope it all goes well when he moves back!
Jamie says
When I went bankrupt the main debt was a large tax bill from unpaid (self employed) tax. I had a bankruptcy advisor who said it was likely I would get a bankruptcy restriction order. I am now 5 weeks from the end of the bankruptcy, is it still likely that this may happen? Or is it more likely that this would have been initiated at the beginning of the bankruptcy?
Sara (Debt Camel) says
If the OR hasn’t mentioned this is being considered my guess is that it is now unlikely but still possible.
Zen says
Hi,
I had debt of around £52000. I lost my job on 13/12/2016. Currently I do not have any job. I have applied for Private Hire and Taxi license. I was a field salesman and was earning varound £60000 per annum. My income started falling from October 2015 because my health. I am not in position to do field sales job. I had discussed with a debt advisor and he advised me for IVA. Since I did not had any job he asked if I can arrange £12000 from friends and family. I arranged the money and then applied for IVA which was rejected. All the creditors had agreed accept Zopa who I had to pay £16268. I am applying for a bankruptcy.
I do not own any property. Only asset I have is 2 cars which is in my name the value of each is £1500 and £300 respectively.
Will my bankruptcy be approved by OR. Is BANKRUPTCY the only option for me. After rejection I was told by IP that bankruptcy is the only option left. What happens if my bankruptcy get rejected.
Thanks
Zen
Sara (Debt Camel) says
I can’t see why your bankruptcy wouldn’t be approved – you can’t pay your debts. Only exception would be if you are over 55 and have a large amount of money in a private pension pot.
It’s not clear to me that you have any other options, unless you expect to get back ato a well paying job in a year or two. Even if you do, 53k is a LOT of debt and if you have no assets bankruptcy could still be a good option.
You could talk to StepChange who could look at your whole case and give advice, not just on whether bankruptcy is your best option but also to talk through the practicalities so you are less worried by it.
reuben says
hi
my 12 months are up in October but I have an IPA to pay , I get the point about if you have a change to your income you should tell the OR but what if you acquire an asset such as a car or bike is there the chance that they can take it from you ?
thanks
Sara (Debt Camel) says
Before you are discharged, if you “acquire” a large asset then it may be classed as an “after acquired” asset and can be claimed by the OR, see https://www.insolvencydirect.bis.gov.uk/casehelpmanual/A/AfterAcquiredProperty.htm.
After discharged, in general you can acquire assets and they are not at risk.
BUT if you are self emplyed and are choosing to “pay” yourself with an asset and not treat it as income, that may be different. In general if you are trying to get round some rule (telling the OR about extra income) by doing something unusual then it probably isn’t a good idea! I suggest consulting an accountant or a solicitor if your business affairs are unusual or there is a lot of money involved.
Jane Toal says
I was discharged in August 2016 after one year i still pay the agreed monthly payments. I wanted to take voluntary redundancy and was told I would receive 22000.00. And spoke with my or who advised they would take 12000.00 from this. Is this right. I live in Scotland
Sara (Debt Camel) says
I’m sorry I can’t comment on bankruptcy in Scotland. I suggest you contact a Scotish adviser, see http://www.moneyadvicescotland.org.uk/find-adviser
Emily says
I am so grateful I have found this page!
I was discharged from bankruptcy Oct 2015 however I’m still in an IPA until March 2018. I understand that if I change jobs or get a pay rise, or my bills change I would need to notify the OR.
What I’m confused about is lump sum money; for example, my nanny’s inheritance, PPI well before bankruptcy, for example back in 2006, winnings (like a lottery) or selling my house? The OR have given my house back to me as the equity is negligible, however, if I sold it in a year or so and made £5,000 for example would I have to give back the 5k?
Thank you.
Sara (Debt Camel) says
Any inheritances where the person died after the date of your discharge will come to you. Any lottery wins will as well.
Any PPI will go to the OR because the right to make the PPI claim was an asset at the start of your bankruptcupty which has transferred to the OR.
The OR should have clarified the position for your house. My guess is that if they have removed the restriction on it it is your to sell whenever you want and you don’t have to account to the OR for this. But I suggest you get this confimred with the OR in writing before you do this.
Jo says
Hi. I went bankrupt in November 2017. Was on maternity leave started work this month and I was honest with the official receiver I went back part time. They sent me a IPOQ form which is detailed I’m scared of an IPA yes my hubby pays more bills then me but we now have childcare. I’m worried in case they think or he should pay this but he has his own debts and we just survive now. I only come out with £1000 a month. I pay the childcare and contribute towards the bills but he pays the majority and has 2 other children to pay for. worried. If I don’t agree with the IPA amount if she gives me one can I say I will take this to court to be heard. Hubby can’t afford to pay more he needs his own money I pay my childcare out of my wages and contribute towards bills which leaves me with hardly nothing.
Sara (Debt Camel) says
If you are only working part time and you have childcare costs, you may well not have a problem. If your OR says you have to pay an IPA, I suggest going to your local Citizens Advice and they can help you with this. Yes, you can go to court, but these matters are normally resolved by discussion. The OR is a professional looking to apply the rules fairly, not out to squeeze as much out of you as possible.
A zee says
Hi…I can see you are very helpful..my bankruptcy discharge date on 5th may 2017 …and I have not heard anything from or from last 6 months .just wondering how do I know I am discharge?many thanks
Sara (Debt Camel) says
You can look up your details on the Insolvency Register here: https://www.insolvencydirect.bis.gov.uk/eiir/
Eliza says
Hello. I wondered if you could help me. I was made bankrupt in February 2014. In January 2015 by trustee applied to the court to have my bankruptcy discharge suspended. He was successful. However, I appealed this decision and 15 months later in January 2017, my appeal against the suspension was heard and I won my case. My discharge date was backdated – given as August 2016. Between the appeal date in January 2017 and the time when Judgement was given (which took 3 months), I didn’t hear once from my trustee. Then, once the Judgement had been made and my legal costs were refunded, I received a letter from my trustee asking for copies of my work invoices and bank statements since January 2017. My trustee has not got an incomes payment order in place. He wanted to get one but it was put on hold because of the appeal.
My questions are as follows:
1. If I am now discharged from bankruptcy (and have been so from August 2016), why can the trustee still demand copies of my work invoices and bank statements for the time period post discharge?
2. If he is allowed to do this, then why is he doing so and when / what will prompt the ending to this demand of information?
3. My trustee stated he was going to apply for a IPO in July 2016 and completed the application (this being a month before August, which was given by the appeal judge as my discharge date). Can he still apply for an IPO?
Thank you so much for listening to me – it is a frightening place and I literally don’t know when this is ever going to end. Thanks.
Sara (Debt Camel) says
It is possible for an IPO to be made after discharge if the court application was before discharge (see https://www.insolvencydirect.bis.gov.uk/technicalmanual/ch25-36/Chapter31/part7/part6/part_6.htm).
This may well be what is happening here. If you would like advice and support through this process, go to your local Citizens Advice.
Laura says
Hi I was declared bankrupt April 2016 and have now been discharged. I am still self employed.
Do I have to pay tax for the year 16/17 and if I don’t do I pay money to the official receiver? I can’t seem to find an answer. Thank you
Sara (Debt Camel) says
Hi Laura,
if you went bankrupt before April 6th, this would have been in the 2015/16 tax year, in which case your tax for 2016/17 would be as normal.
On or after April 6th would have been in the 2016/17 tax year. In this case, assuming you were self-employed for the whole year, I understand the tax you would have paid to HMRC is instead paid to the Official Receiver. If you ask your OR’s office, they should be able to explain exactly how this is done.
Laura says
Thank you. It was after 6th. Will they contact me? Any idea when? Will I still need to pay even though I’ve been discharged?
Sara (Debt Camel) says
I don’t think your discharge changes what should happen to the tax in the tax year before your discharge. Presumably, you would normally complete a tax form. I suggest you ask your Official Receiver’s office if you should do this as normal and how / where you should pay the resulting tax.