Bankruptcy Restriction Order “BRO”
A BRO is an order that can be made against you when you have been made bankrupt and it is found that your behaviour prior to bankruptcy is dishonest, reckless or fraudulent
A BRO can extend certain restrictions of bankruptcy for up to 15 years. The effects of a BRO includes:-
- Obtaining credit beyond £500 without Court’s permission is a criminal offence
- The Bankrupt has to trade in the name under which they were adjudged bankrupt
- A prohibition from acting as a director of a limited company
Restrictions will also be placed upto you in your everyday life including but not limited to being unable act as a local councillor or a school governor, exercise a right to buy or be a Member of Parliament in England or Wales.
If a BRO is made against you and you break any of the restrictions, you’ll be committing a criminal offence. You could be fined or even sent to prison.
The period of the BRO will depend on how culpable the bankrupt person is deemed to be. As a guide the period for the restrictions is imposed as follows:
- 2 – 15 years Culpable Behaviour – incurring debt knowing you could not settle it
- 5 – 10 years Reckless Behaviour – for example racking up debts by gambling
- 10 – 15 years Dishonest Behaviour – getting involved in fraudulent activities
What can lead to a BRO?
The official receiver can ask the court to look at any of the following behaviour when deciding if a BRO should be made
- Incurring debts that you knew, or ought to have known, you had no reasonable chance of repaying
- Giving away assets or selling them at less than their value
- Deliberately paying off some creditors in preference to others
- Gambling or making rash speculations or being unreasonably extravagant
- Failing to keep or produce records that would explain a loss of money or property
- Behaving fraudulently e.g. giving false details to obtain credit
- Causing your debts to increase by neglecting your business affairs
- Failing to supply goods or services that have been paid for (e.g. taking deposits)
- Carrying on a business when you knew or ought to have known you could not pay your debts
- Not co-operating with the official receiver or trustee.
https://www.gov.uk/government/publications/bankruptcy-restrictions-orders
When deciding whether to make a BRO, the court and The Official Receiver will look at your behaviour before and after bankruptcy. The length of your BRO depends on how much creditors have lost, your attitude, how aware were you of your situation at the time of the behaviour and the likelihood of you doing it again.
Bankruptcy Restriction Undertaking
If you do get notice from The Official Receiver that they intend applying for a Bankruptcy Restriction Order, you will be provided with a copy of the application to court which sets out what the Official Receiver believes you have done and any supporting evidence.
You need to decide whether you propose to challenge the application or accept the BRO application. Acceptance can mean that the term of the restriction is less than the term the court is likely to determine. The acceptance is effectively agreeing to a Bankruptcy Restriction Undertaking BRU and the details go onto the public insolvency register until the end of the BRU.
Getting advice on your options if you are facing serious debt issues is vital. The Debt Advisor is able to advise on all options including formal and informal options.
More about bankruptcy
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Client Story
Shirley and her husband were involved as partners in the purchase of a potential development with another couple. Unfortunately part way through the development the relationship between the 2 couples broke down and Shirley and her husband decided to exit the deal and hand over their share to the other party. This resulted in action taken against Shirley’s husband and he chose to petition for Bankruptcy. At the time no action was taken against Shirley. However, some years later the other party issued a writ against Shirley and entered into a Deed of compromise to repay of £57,000 the debt by monthly repayments. Shirley’s sought advice from The Business Debt Advisor team on Shirley’s behalf. Shirley’s health had been seriously effected by a bout of cancer and the stress of the debt was effecting her recovery. As Shirley and her husband lived in rented accommodation and had minimal assets, it was clear that bankruptcy was really the only sensible option. The Business Debt Advisor team helped Shirley pull together financial information on her assets which were minimal plus her debts and income and expenditure. We helped her complete her bankruptcy application online and her husband who was still working, helped out with the application fee of £680. Within days Shirley was bankrupt and her experience of dealing with the Official Receiver was very positive. They agreed with her that she would affordable pay income contributions of £210 per month for a 3 year period.