Being made bankrupt is a very serious matter. A person must hand over their estate, including their home, to their trustee. In addition there are a number of other consequences to being made bankrupt. The following are some of the other consequences that a debtor should be aware of:
An individual’s credit rating will be affected for many years. Neither the Accountant in Bankruptcy nor the trustee have any influence over a debtor's credit rating.
A bank may freeze or close an account of someone who is bankrupt. Some banks will allow a debtor to have an account, however the debtor must tell their bank that they have been made bankrupt. If a debtor has any savings they will be transferred to their trustee.
If a debtor experiences any difficulties with their bank account they should speak to their bank or a money adviser.
Service providers such as gas or electricity suppliers may have concerns with the way they provide services to a debtor and may wish to change the way they receive payments. The changes could include the installation of a meter or the set-up of a pre-payment plan.
Every bankruptcy is recorded on a public register called the Register of Insolvencies. Anyone can search the Register and there is no charge for doing this. Details of a bankruptcy will remain on the Register for 2 years after the trustee has been discharged.
Certain professions may be affected by bankruptcy, for example, solicitors, accountants and Government officials, however, this is not a full list, your trustee will be able to advise you if you could be affected.
If a trustee considers that a debtor's conduct has been dishonest or blameworthy in some way, either before or during the bankruptcy, they will report it to the Accountant in Bankruptcy. The Accountant in Bankruptcy may seek restrictions on the debtor's behaviour which can last between two and 15 years. Details of the restrictions are recorded on the Register of Insolvencies.
The following are examples of behaviour by debtors that could be considered dishonest or blameworthy:
- incurring debts that they knew they 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;
- not co-operating with the trustee during the period of the bankruptcy.
The Accountant in Bankruptcy will consider the evidence provided by the trustee and will make a decision to grant a Bankruptcy Restrictions Order which can last for a minimum of two years. The Accountant in Bankruptcy will make an application to the sheriff (if requesting a Bankruptcy Restrictions Order for between five and 15 years) asking for a Bankruptcy Restrictions Order to be made against the debtor if they have been dishonest or blameworthy in the bankruptcy.
The sheriff will consider the application and any other evidence put before them and will decide whether they should impose such an order. If the order is imposed, the debtor will remain subject to certain restrictions for the specific period stated even after they are discharged from bankruptcy.
Failure to comply with the terms of bankruptcy restriction is an offence.