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When will the bankruptcy finish (officialy known as being discharged)?
This is one of the most common questions asked when people are considering bankruptcy and so i have decided to provide a brief guide to the general process that occurs.
I should make it clear that nearly everything in bankruptcy has many exceptions and for exact advice on your situation you should seek the help of an expert with access to all your details.
Secondly i should make it clear that although these are the general rules the Official Receiver has a lot of scope for the interpretation of them and it is their decision and by extension the decision of the court that counts. Sometimes nobody will be able to give an exact answer other than the OR after you have been made bankrupt and therefore a certain amount of uncertainty always exists.
Thats it for the disclaimers - The first question is what does it mean to be discharged and how does it help my situation?
There are two jobs that are done in bankruptcy, one is the investigation of your finances and the rectrictions that are placed upon you, the other is dealing with the assets and liabilities in the bankruptcy ie looking after your estate. This second job is called the trustee of your estate and is not affected by your discharge, they will continue to do this job until all matters are finished, you will get a seperate notice "The release of Trustee" when this has been completed.
The first job is always completed by the Official Receiver and is what you are discharged from. There are several effects that discharge has, firstly any assets that devolve upon you during your bankruptcy can be claimed by the Trustee and this ends at discharge. Secondly, you are subject to restrictions whilst in bankruptcy and these end when you are discharged. Finally are your liabilities, contrary to popular folklore your liability does not end when you are made bankrupt. Instead you remain liable but the debts are put on hold as it were as you are protected by the court from any action being taken against you by the creditors. Your liability actually ends when you are discharged as you are discharged from your debts as well as the bankruptcy proceedings.
Ok so thats what it means, the main question is when it will happen?
Lets start with the standard case. If nothing else happens to change the situation then you will be discharged after 12 months. This is called automatic discharge and well is, automatic. You do not receive any notification but you can check the online insolvency register and you can request a letter from the OR to confirm your discharge. The Official paperwork is a discharge certificate which you can request from the court but a fee applies.
Early Discharge (ED)
The first thing to point out is that ED is totally at the discretion of the OR and you have no right to request it. so how and why do people get it? Well there are several steps below.
1. The first step is that the OR must agree that your case is suitable to be put on their ED list. If the OR believes that you have acted in any way prior to or during the bankruptcy in a manner that they would constitute to be misconduct then you will not be put forward for ED. It may be the case that the misconduct is small and no further action of another kind is being taken but it is enough to stop ED.
2. Presuming you make it on to the list, the next stage is that all actions to do with the investigation of your case must be completed before the process is started. This is not all actions ie there may be assets to be realised but any action that has the ability to change the OR's mind regarding your conduct. An example may be where a solicitor is being slow or awkward to respond and so the OR will not star the process as the informtion if received may highlight misconduct.
3. Once the process starts which must be at least 3 months after the report has been sent to all of your creditors a letter is sent out to all of your creditors (and your IP if you have a seperate trustee). This letter asks if the creditors have any objection to you being discharged. If they do it must be a valid objection (ie not just a bit peeved that they did not get paid) usually some informtion that the OR did not already know and would change their mind about your conduct.
4. At the same time the OR if appropriate will send a new form for you to fill in to check if any of your circumstance have changed (If you have no hope of workng then the wont send this out). If they send one to you and you do not return it then you will not get an ED.
5. Once time has passed for any objections and you have responded to the questionaire thenthe OR will file papers at court to grant the ED. They will update the online register and write to you to tell you that an ED has been granted. The date of discharge is the date that the court stamps the order so it is often a few days after that you actually find out about it.
Suspension of discarge
If the OR at anypoint in time thinks that you are not cooperating then he may apply to the court to suspend your discharge. I should make it clear that this is not for misconduct prior to the bankruptcy, ie even if you have done something very wrong as long as you cooperate with the OR during the bankruptcy you will be discharged after one year. (there are other sanctions that may apply but they do not affect your discharge). Usually if your discharge is suspended it will be for an indefinite period of time so you will remain bankrupt until you do co-operate.
Hope that helps and if you want any ther topic covered then do ask
This is one of the most common questions asked when people are considering bankruptcy and so i have decided to provide a brief guide to the general process that occurs.
I should make it clear that nearly everything in bankruptcy has many exceptions and for exact advice on your situation you should seek the help of an expert with access to all your details.
Secondly i should make it clear that although these are the general rules the Official Receiver has a lot of scope for the interpretation of them and it is their decision and by extension the decision of the court that counts. Sometimes nobody will be able to give an exact answer other than the OR after you have been made bankrupt and therefore a certain amount of uncertainty always exists.
Thats it for the disclaimers - The first question is what does it mean to be discharged and how does it help my situation?
There are two jobs that are done in bankruptcy, one is the investigation of your finances and the rectrictions that are placed upon you, the other is dealing with the assets and liabilities in the bankruptcy ie looking after your estate. This second job is called the trustee of your estate and is not affected by your discharge, they will continue to do this job until all matters are finished, you will get a seperate notice "The release of Trustee" when this has been completed.
The first job is always completed by the Official Receiver and is what you are discharged from. There are several effects that discharge has, firstly any assets that devolve upon you during your bankruptcy can be claimed by the Trustee and this ends at discharge. Secondly, you are subject to restrictions whilst in bankruptcy and these end when you are discharged. Finally are your liabilities, contrary to popular folklore your liability does not end when you are made bankrupt. Instead you remain liable but the debts are put on hold as it were as you are protected by the court from any action being taken against you by the creditors. Your liability actually ends when you are discharged as you are discharged from your debts as well as the bankruptcy proceedings.
Ok so thats what it means, the main question is when it will happen?
Lets start with the standard case. If nothing else happens to change the situation then you will be discharged after 12 months. This is called automatic discharge and well is, automatic. You do not receive any notification but you can check the online insolvency register and you can request a letter from the OR to confirm your discharge. The Official paperwork is a discharge certificate which you can request from the court but a fee applies.
Early Discharge (ED)
The first thing to point out is that ED is totally at the discretion of the OR and you have no right to request it. so how and why do people get it? Well there are several steps below.
1. The first step is that the OR must agree that your case is suitable to be put on their ED list. If the OR believes that you have acted in any way prior to or during the bankruptcy in a manner that they would constitute to be misconduct then you will not be put forward for ED. It may be the case that the misconduct is small and no further action of another kind is being taken but it is enough to stop ED.
2. Presuming you make it on to the list, the next stage is that all actions to do with the investigation of your case must be completed before the process is started. This is not all actions ie there may be assets to be realised but any action that has the ability to change the OR's mind regarding your conduct. An example may be where a solicitor is being slow or awkward to respond and so the OR will not star the process as the informtion if received may highlight misconduct.
3. Once the process starts which must be at least 3 months after the report has been sent to all of your creditors a letter is sent out to all of your creditors (and your IP if you have a seperate trustee). This letter asks if the creditors have any objection to you being discharged. If they do it must be a valid objection (ie not just a bit peeved that they did not get paid) usually some informtion that the OR did not already know and would change their mind about your conduct.
4. At the same time the OR if appropriate will send a new form for you to fill in to check if any of your circumstance have changed (If you have no hope of workng then the wont send this out). If they send one to you and you do not return it then you will not get an ED.
5. Once time has passed for any objections and you have responded to the questionaire thenthe OR will file papers at court to grant the ED. They will update the online register and write to you to tell you that an ED has been granted. The date of discharge is the date that the court stamps the order so it is often a few days after that you actually find out about it.
Suspension of discarge
If the OR at anypoint in time thinks that you are not cooperating then he may apply to the court to suspend your discharge. I should make it clear that this is not for misconduct prior to the bankruptcy, ie even if you have done something very wrong as long as you cooperate with the OR during the bankruptcy you will be discharged after one year. (there are other sanctions that may apply but they do not affect your discharge). Usually if your discharge is suspended it will be for an indefinite period of time so you will remain bankrupt until you do co-operate.
Hope that helps and if you want any ther topic covered then do ask
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