2.3 What are the consequences of being bankrupt?
Being made bankrupt is a very serious matter and the following are some of the consequences you should be aware of:
Credit rating
Your credit rating will be affected for many years. Neither the Accountant in Bankruptcy nor your trustee has any influence over your credit rating.
Bank accounts
Some banks will allow you to have an account but you must tell your bank that you have been made bankrupt. Your bank may freeze or close your account and you might have to open a different bank account. If you have any savings they will be transferred to your trustee. Your bank may still allow you to have your salary or benefits paid into an account. If you experience any difficulties with your bank account, you should speak to your bank or a money adviser.
Service providers
As a result of your bankruptcy some companies, for example gas or electricity suppliers, may have concerns about the way they provide their services to you. They may wish to change the way they receive payments from you. This could include installing a meter or setting up a pre-payment plan. You can speak to a money adviser about this.
Public records
Your bankruptcy is recorded on a public register called the Register of Insolvencies. Anyone can search the Register of Insolvencies, but there is a charge for doing this. Details of your bankruptcy will remain on the Register of Insolvencies until one year after your trustee has completed their duties.
Your trustee will advertise your bankruptcy in a publication called the 'Edinburgh Gazette'. This is an official publication that is used to inform creditors and credit agencies that you have been made bankrupt.
Bankruptcy restrictions
If your trustee considers that your conduct has been dishonestor blameworthy in some way, either before or during your bankruptcy, they will report you to the Accountant in Bankruptcy. The Accountant in Bankruptcy may seek restrictions on your behaviour which can last between 2 and 15 years. Details of the restrictions are recorded on the Register of Insolvencies.
The following are examples of behaviour that could be considered dishonest or blameworthy:
- incurring debts that you knew you had no reasonable chance of repaying;
- giving away assets or selling them at less than their value;
- gambling or making rash speculations or being unreasonably extravagant; and
- not co-operating with your trustee during the period of your bankruptcy.
The Accountant in Bankruptcy will consider the evidence provided by your trustee and will make an application to the sheriff, asking for a Bankruptcy Restrictions Order (BRO) to be made against you if have been dishonest or blameworthy in your bankruptcy. The sheriff will consider the application and any other evidence put before them and will decide whether they should impose a BRO. If they do, you will remain subject to certain restrictions for the period stated in the BRO even after you are discharged from your bankruptcy. You are committing an offence if you fail to comply with the terms of your bankruptcy restrictions.
It is possible for you to agree with the Accountant in Bankruptcy and accept the restrictions rather than go to court. This is called a Bankruptcy Restrictions Undertaking (BRU).
Further information on bankruptcy restrictions is available in the AiB publication, 'Bankruptcy Restrictions - Orders and Undertakings'.