Few months back Freddie Perkins filed for bankruptcy. Maybe he had some real reasons to take this decision. But he never thought that transparency could be a fatal issue. He transferred most of his valuable assets to his wife just before filing for bankruptcy to save as much as he could. He did not care to disclose them to his Official Receiver. However the truth was unfolded and he is now facing a Bankruptcy restriction order.
Freddie Perkins is an imaginary character but you can find a lot of people like Freddie who are facing charges of being blameworthy.
What is a Bankruptcy Restriction Order or BRO?
Bankruptcy restriction order is invoked when the Official Receiver finds out that the bankrupt has been blameworthy or dishonest before or during the bankruptcy process. If the Official Receiver finds something like this, he or she will report it to the court for a review. If the accused is found guilty, the court will invoke bankruptcy restriction order on him or her.
The strictness of the order depends on the severity of misbehaviour. The bankruptcy restriction order has a long term effect which can remain from 2 years to 15 years. However, if you are found guilty of any criminal activity or fraud, the order can remain from 11 years to 15 years. The order will depend up on your bankruptcy offences.
Here are some reasons that may invoke Bankruptcy Restriction order:
- Acquiring debt uselessly with no expectation to repay it: It also includes increased debts on credit cards.
- Unreasonable extravagance or gambling that has led to bankruptcy
- Going in for a transaction at undervalue: If you give away or sell your assets just before the bankruptcy at a cheap price the Court may invoke BRO. This transaction can be reversed by a court order.
- Preferring some creditors over others: You are not supposed to repay debts to your preferred creditors only. While you enter a bankruptcy every creditor must have a fair share of repayment.
- Fraudulent activities: If the bankrupt steals money to pay debts he can be imprisoned too.
There are various other reasons that can make a person get charged with the BRO. For example:
- Contributing excessively in pension plans
- You have entered a bankruptcy hiding the fact that you have already had a bankruptcy within 6 years.
- If you have failed to supply the goods that has been claimed in the bankruptcy
- If you neglect the business affairs that have caused bankruptcy
- If you do not cooperate with the Official Receiver
If you are charged with the bankruptcy restriction order the court will invoke these following restrictions:
- You will not be able to act as the director of a company.
- You cannot take part in any promotion or formation of a management without the permission of the court
- If you take up a loan over £500 within the BRO you have to inform the creditor about your status.
- You cannot work as an insolvency practitioner or as a manger of a company.
- You cannot become a member of the parliament in England and Wales.
A borrower can apply to the court against the allegations made against him by the Official Receiver. BRO can sometimes be annulled or shortened upon the basis of the borrower’s application to the court.
