A reader asked:
I went bankrupt in March 2017 and discharged in 2018. 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 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 and the restrictions that end after discharge.
Contents
When do you get discharged (and why this may be suspended very rarely)?
Almost everyone is discharged 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.
- this isn’t something you should worry about. 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 being dishonest.
- 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.
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, will want to see a Certificate of Discharge. How you get this depends on how you went bankrupt.
If you applied for bankruptcy online after April 2016, you can email the Insolvency Service and ask for a Certificate of Discharge. This is free.
If you went bankrupt before April 2016 or if you were made bankruptcy by a creditor you should 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
When you are discharged you are released from your debts (except for any such as student loans which couldn’t form part of your bankruptcy .)
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.
The events you no longer have to tell the OR about include:
- receiving redundancy money (see Redundancy and bankruptcy);
- getting an inheritance (unless the person died before you were discharged, see Inheriting money when bankrupt); and
- a pension lump sum or money you withdraw from a pension (see Bankruptcy and Pensions).
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.
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.
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 something” may be an asset that now 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 surprises and disappoints many people. There is no point in you asking for a payday loan refund for loans taken prior to your bankruptcy after your discharge because the money will go to the OR, not to you.
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 very few people get BRO/BRUs.
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.
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 rare exception – if 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 – 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 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.
Repairing your credit after bankruptcy
What happens when? A bankruptcy timeline
How can you start to save small amounts?
Dean says
Hi, I was declared bankrupt in April 2018 and I started paying an IPA in June of the same year. Unfortunately I have missed some payments due to fluctuating pay. What happens after the 3 years if there is still amounts outstanding on an IPA? Thanks.
Sara (Debt Camel) says
You need to talk to the firm that is collecting your IPA payments about this. If you can supply you payslips, there may well not be a problem and you may not need to make any catch-up payments but it is better addressed, not ignored.
If your pay has generally dropped, you should ask for the IPA to be reduced accordingly.
Beth says
Hi ☺️ I am owed money which was awarded to me at a tribunal in 2018 and still hasn’t been paid. I have just found out that the debtor went bankrupt in2019 and was discharged in May this year but I was never contacted regarding the money owed to me. Does this mean there is now no chance of me getting my money back? I have only found this out as I was filling in a form for an enforcement officer to collect the money for me and happened to stumble across the bankruptcy online.
Sara (Debt Camel) says
You need to talk to his Official Receiver’s office. The fact he was discharged says nothing about whether there is going to be any distribution to his creditors.
Lee Wright says
Hi I was made Bankrupt in 2019 and it ran until May 2020 I have just received a letter from a debt collection company regarding a debt I had forgotten about relating to 2015. Obviously if I had remembered it would have been included in the Bankruptcy. As it is a debt for 10K can they still chase this or can I ask for it to be included retrospectively in the bankruptcy
Sara (Debt Camel) says
This isn’t a problem, it will have been included in your bankruptcy even though you didn’t list it on your bankruptcy application. See https://debtcamel.co.uk/forgot-debt-bankruptcy/.
STUART HOLDEN says
I went bankrupt last year and was discharged last week.
on my credit score the credit cards are still showing as money owed and ex amount of missed payments.
Will these eventually right themselves to zero?
Sara (Debt Camel) says
Yes they should. I suggest you look again in 6 months time.
Danielle says
Hi, I am just wondering how long after being discharged from my bankruptcy in Scotland will the accounts be marked as closed on my credit file. I still have 32 payments to make to my trustee.
Sara (Debt Camel) says
I will ask a Scottish expert to reply.
Scottish Adviser says
Hi.
Although you are discharged after one year, you do need to make your 48 month payments if you can afford to.
You are no longer personally liable to your creditors for your debt after your discharge, just to your Trustee in Bankruptcy.
However, the debts do still exist and continue to exist even after your discharge.
The debts will not come off your Credit File for 6 years from when they were defaulted on, or from your date of bankruptcy, whichever is the earliest date.
Danielle says
Thank you for this, I understand they will remain on my credit file however they are all showing as open accounts with outstanding balances. I was wondering if this is correct or if the accounts should be marked as closed (showing settled or part settled) and the balances removed.
Stephanie Allen says
I am interested in hearing if you had had a response on this as was wondering the same
Andy Jones says
A bank that was part of my bankruptcy in 2004 (discharged 2005) claimed money of my IVA in 2016 before selling my accounts
to a finance company who then claimed against my IVA .
I have proven all this
THE wording is ..claiming money by false representation .
Can you advise how much compensation is due .
I have suffered ill health because of this which again i have proven
My IVA is finished
Sara (Debt Camel) says
The IVA completed successfully? Did you repay the debts in full or did your creditors accept a settlement? (These questions are relevant!)
Andy says
The legal creditor wrote the debt off
Sara (Debt Camel) says
Is this creditor connected to the bankruptcy discharge issue? What about your other debts? Sorry unless you can give a fuller explanation of what happened in your IVA – the debts that went into it, how it ended – I can’t say anything useful.
I can give you the name of a good insolvency solicitor if you want, but I have no idea if you have any basis for a claim for compensation.
Andy says
Two seperate organisations not linked .
bankruptcy discharged in 2005 with bank who claimed on the back of my IVA 11 years later
IVA I have letter of debt written off by creditor legittimately involved
no other debts
The bank who claimed illegally infact fraudulently under the making false representation to claim money
have been told by the insolvency service they acted against the rules and my debt to them had been written off upon
discharge in 2005
Sara (Debt Camel) says
A few debts are not released when you are discharged from bankruptcy. I can’t comment on whether this debt was one of those that is written off or not.
It is not clear to me what you have actually lost by whatever has gone on with the debt being added to your IVA.
I do think you need some legal advice and I will email you details of a solicitor.
Drew says
Hello, i’m 6 months away from being discharged from bankruptcy, but have been told that I will most likely be getting a BRO/BRU, which I agree with. I am currently unemployed so am not having to pay towards my debts … but what if I get a job after the 6 months? (My BRO could last 5 years ), will I then be forced to pay towards an IPA?
Sara (Debt Camel) says
As the article above says:
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.
This doesn’t change if you get a BRO.
Nigel Smalley says
I went Bankrupt in 1984 and was discharged in 1986. Do I need to declare this to an Insurance company in 2020 when insuring my house.
Sara (Debt Camel) says
yes if you are asked if you have ever been bankrupt.
Nigel Smalley says
Thanks. Thought after 36 years it was no longer important. Can not see how that can affect an Insurance policy but there we go . Thanks for reply. Nigel
Sara (Debt Camel) says
I doubt any insurance company will care!
James says
I’ve recently been discharged from my bankruptcy order after 1 year. However, I have been expecting a BRO to come through as some blame to bankruptcy was due to gambling. Will a BRO still be served and how will I be notified?
Thank you
Sara (Debt Camel) says
Did the OR write to you and tell you they planned to apply for a BRO? Or are you just worried and think they might?
The OR has to apply to the court before your discharge UNLESS they get permission from the court to apply afterwards, for example if something about your behaviour has only just come to light.
James says
I’ve not received any letter or email communications. I’m just worried and believed they will apply a BRO for me.
Sara (Debt Camel) says
I suggest you ask your OR’s office, they should confirm that one isn’t being considered.
A LOT more people are worried about BROs than actually get one.
Ras says
Hi, I am only few weeks away to get discharge from my bankruptcy. I had few shares on limited companies which I have included at my bankruptcy though these limited companies are not doing well & on loss but what happens to those shares after my discharge? Will I get back those shares if I want, should I ask OR for this?
Second question,
I m also with IPA for another 2 years. if I get any help from my family, can I clear my rest payment in one go after my discharge so I don’t have to worry about any other payments including to pay any creditors even if I get any other income or will I have to pay the creditors through OR even after my discharge till another 2 years if I get any other income including from my Selfemploment income or after discharge I don’t have to pay anything anymore even if my income grows significantly.
Thank you
Sara (Debt Camel) says
Those shares now belong to the OR and will not be transferred back to you.
Your IPA carries on after discharge and may go up if your income goes up, although it can also go down if your income goes down or your expenses go up. A relation can offer to make a payment now of the full amount, I don’t know if it will be accepted
HS says
Hi Sarah, I have greatly benefitted from your advice previously and have shared your site with several other people who are in difficult circumstances – so, first of all: thank you, hugely.
I was declared bankrupt in Sept 2019, discharged in Sept 2020. However, my application for BR was made several months in advance of this date and took a long time to resolve due to an ongoing solicitor payment relating to my divorce. The OR decided that as my case had taken so long, they would accept the BR but re-initiate the 3 year IPA from June 2020 which I signed to accept. Since that time, I have been made redundant (post-discharge). However, I found a new job very quickly which I informed the OR about by email, suggesting I send them a new budget. I haven’t received their response and am very overloaded by my new job and highly anxious about how I should follow up.
Sara (Debt Camel) says
Are you getting paid less or more in the new job? HAve any of your other expenses gone up or down?
HS says
I am earning slightly more due to increased hours with outgoings that have risen since the last approved budget. Concerned that there has been no reply to my email to the OR and what are my responsibilities thus. I’m also stuck with a very old and unreliable car which is the second cheap car I’ve purchased since BR – the first one lasted 5 months, my mother – not at all wealthy – bought the second one and the OR didn’t allow a repayment to her in my budget for that necessary purchase. I utterly rely on having a car to get to work and to get my eldest to the school bus (he goes to school 25 miles away) and cannot see that this will be a very reliable solution for the next 2.5 years. Any thoughts very much appreciated.
Sara (Debt Camel) says
I would send them another email saying as your income has risen a bit but so have your expenses (if that is accurate), say you asked them on dd/mm/yy if they wanted a new budget but you haven’t had a reply so you assume it is ok to carry on with the current IPA payments.
re the car payments, I suggest you talk to your local Citizens Advice about this and ask if they can write a letter to the OR asking for these to be reconsidered as you need the car to get to work.
Adam says
Hi . . . I was discharged 11/4/20
I had a NT IPA that should have ended 5/4/20 However due to losing my Job in the Febuary before I made them aware of my change of circumstances.
IPA replied telling my account was on hold and this will effect my discharge. This email was sent 3 days after my discharge ( I have cert)
They have asked for proof of universal credit in July 2020 which I have sent and heard nothing since.
The email said they will be reviewing my IPA. As far as I was aware my IPA ended with the tax year as it was only my tax money they were collecting.
Maybe I’m worrying for nothing but being left in the dark hasn’t helped. Any advice is greatly appreciated. Thanks
Sara (Debt Camel) says
As you say, you may be worrying for nothing, but this has been so long I suggest you ask them for an update. If you aren’t happy with what you are told, ask your local Citizens Advice for help in talking to the Trustee.
Adam says
Thanks for getting back to me. Yes I will call tomorrow. Was wondering if anyone had experienced this before?
What could possibly be happening etc
Sara (Debt Camel) says
I think Covid-19 may have led to some cases falling through the cracks. This doesn’t mean that there is anything wrong, just yours never got tidied up properly.
Daniel says
Hello, thanks for all this great information!
Am i correct in believing that if I declare bankruptcy and subsequently receive a BRO/BRU, i will still ordinarily be discharged of the bankruptcy after 12 months, despite the BRO/BRU? Also, if i received a windfall after my bankruptcy was discharged BUT before the end date of a BRO/BRU, is that windfall liable to be taken to repay creditors? Thank you
Sara (Debt Camel) says
Am i correct in believing that if I declare bankruptcy and subsequently receive a BRO/BRU, i will still ordinarily be discharged of the bankruptcy after 12 months, despite the BRO/BRU?
Yes
if i received a windfall after my bankruptcy was discharged BUT before the end date of a BRO/BRU, is that windfall liable to be taken to repay creditors?
The BRO/BRU isn’t relevant here. But see the section on IPAs/IPOs carry on after discharge in the article above these comments.
Also see https://debtcamel.co.uk/bankruptcy-restriction-order-bro/ for more about BRO/BRUs
James says
Thanks for the great article.
I’m discharged on March 18th this year and the company I work for wants me as a director and shareholder. They will be also be wanting to pay me via dividends monthly from profits with the first dividend made at the end of March.
Having read this article it states after bankruptcy what I earn or then create as assets can no longer be touched as they are mine.
I have no IPO’s or further restrictions, so my question is, is this fine?
Las thing I want is to file my accounts for the year 20/21 and it showing a dividend in March and for it to be taken away.
Weatherman says
Hi James
You can check this with the Official Receiver – but provided that the payment of the dividend wasn’t artificially delayed until after your discharge, you should indeed be fine. Make sure you’ve got documentation showing the date of the payment, as it might get queried if your accounts just say ‘March’.
Sara (Debt Camel) says
Were you a director or shareholder of this company before your bankruptcy?
James says
Yes, I was. I resigned because I had to and haven’t taken dividends only a salary. The dividend wouldn’t be artificially delayed it would just start and be certificated dated 31st March and then each month after that.
Sara (Debt Camel) says
Thanks.
The Insolvency Service has rules about people not acting as shadow directors while they are bankrupt – I am not suggesting you have done this but I think you need some advice.
This is a pretty specialist area. I suggest you should talk to Business Debtline https://www.businessdebtline.org/ about this or consult a solicitor.
Stephanie says
I was declared bankrupt on 23rd Jan 2018 and discharged the year after.
The debts included are still showing as defaults, not settled.
Is this something I should look into? I am keen to get my credit improved as soon as possible.
The OR also had a 20% beneficiary in a shared ownership property but as yet not made a claim on it.
Am I right in thinking that after 3 years, all rights are returned to me?
Thanks in advance
Weatherman says
Hi Stephanie
The defaults will stay on your file for six years after they were entered. Going bankrupt doesn’t affect that. But they will be ‘overshadowed’ by your bankruptcy marker on your credit report in any case. Your credit rating will be quite badly affected by your bankruptcy until six years after you went bankrupt.
The OR has two years and three months from the date of your bankruptcy to decide what to do with any equity in your home. They then have another nine months (so 3 years after your bankruptcy) to actually deal with that equity. At that point, it’s returned to you.
They’ll only do this if your interest in the property is likely to be more than £1,000, after any sale fees etc.
Sara (Debt Camel) says
See https://debtcamel.co.uk/credit-file-after-bankruptcy/ for how to get the debts included in your bankruptcy marked as settled or partially settled. This won’t improve your credit score – as Weatherman says that isn’t going to impove much until the bankruptcy goes, which would be 2024 – but may make some lenders more prepared to lend to you.
Iain says
Hi Sara. I was discharged from bankruptcy in April 2020. I have a SIPP from transferring my UK pensions when I worked overseas.
The SIPP I had was fraudulently mismanaged by the finance company who managed the SIPP and I lost a substantial sum as a result.
Am I entitled to claim for these losses through the FCA or will any of this pension compensation just go straight to the OR? Thanks.
Tom says
Hi
My bankruptcy came to an end 3 months ago but when I search my name it still appears on the search engine under the Gazette. Will this remain for 6 years like our credit record. I’m conscious as I’m applying for new job roles and worried this may be found.
Sara (Debt Camel) says
See https://www.thegazette.co.uk/insolvency/content/100262 which explains the Gazette’s process for removing entries from search engines.
Emma says
Hi
I was discharged from bankruptcy in Dec 2016 and have been subject to debtor contribution order for 48 months. During this time I have missed a few payments and after moving home to my parents and agreed to pay them the same as when I was renting for letting me stay. Unfortuantky in the last two years of my debtors order I started to have a serious gambling problem that got worse and I was gambling the money I should have been paying my parents and this is evident on my bank statements which the trustee has asked to see as I’ve missed a few payments. Will the trustee now impose a BRO even though my 48 months debtor contribution was due to end in Dec 20. I would happily pay the arrears I owe. I have registered with gamstop closed all gambling accounts and sought help with my mental health.
Sara (Debt Camel) says
“debtor contribution order” I guess you live in Scotland.
Can I suggest you ask this question on the following Scottish debt blog https://www.advicescotland.com/home/sequestration/ where it will be answered by a Scottish expert.
Shelley says
Hello. I was discharged from bankruptcy in Nov 2014. It is now cleared from my credit file. I had a secured loan at the time of bankruptcy and it wasn’t explained that I would need to keep up these payments as well as my mortgage. I was advised to only pay my mortgage and nothing more. This I did. The house was in negative equity and the equity returned to me in 2016. I still receive statements from the secured loan (then welcome finance, changed to coast finance soluations. What would be my best option moving forward? I’ve separated from my husband who although liable for half the mortgage doesn’t pay anything. I need to look at the option of selling which would mean loosing what little equity there is to coastal. Or would there be another way forward so I could get a mortgage in my own right and have the charge removed. This is not a get out of debt free question either. I know I took the money in the first place. Just looking for advice moving forward
Sara (Debt Camel) says
who advised you to only pay the mortgage?
(I am asking as I need to suggest who you should talk to – and I don’t want to send you back to someone that gave you duff advice – or good advice in a way you did not understand – before.)
Shelley says
It was a long time ago. It was a free financial advice service local to me. He helped me complete the bankruptcy form and I submitted it. The service / man won’t even be running anymore. It will have been in 2012
Sara (Debt Camel) says
I am not aware that the charge can be removed, in which case it & the mortgage would be paid by your solicitor when you sell the house. I don’t think your bankruptcy changes this, but I suggest you talk to National Debtline on 0808 808 4000 about this. Not just to know about the charge but to look at what your options are. It seems odd that you have only received statements from the secured creditor.
Shelley says
Thank you for replying. They send me statements all the time but never actually get in touch.
I will give that number a call thank you