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Discharge from Bankruptcy

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Discharge from BankruptcyAfter your Bankruptcy is over you will be discharged. In most cases this happens automatically after 12 months.

You will not be notified of the fact your Bankruptcy is over. You will not receive a letter or telephone call. On the anniversary of going Bankrupt the date of discharge will simply be confirmed on the Insolvency register.

What does Discharge from Bankruptcy mean?

Discharge from bankruptcy means that you are no longer a bankrupt person. It means your name will be taken off the Insolvency Register (although this will take a further 3 months). You are also released from the restrictions you were under. You can now be a Company Director if you wish. You can borrow more than £500 without telling the lender you are Bankrupt.

For most people the most important aspect of discharge from bankruptcy is that you can now keep any windfalls that you receive. If you are made redundant and receive a payment or win the lottery after discharge this money is yours to keep.

BE Tip: There are some exceptions to the windfall rule. One in particular is compensation. Compensation from PPI claims or other claims based on events which happened before or during your Bankruptcy will still have to be paid to the Official Receiver.

Do you continue to pay an IPA after Discharge from Bankruptcy?

Even after discharge from bankruptcy you must continue to pay an Income Payment Order (IPA) if one is in place. An IPA lasts for 3 years from the date it was introduced whether or not you are discharged in the mean time.

During an IPA if your circumstances improve or get worse you must inform the Official receiver immediately. This is the case even if the change happens after you have been discharged. This means that the payments you make towards your debts could still increase if your circumstances improve after you are discharged.

When does your Credit Rating improve after Discharge from Bankruptcy

The record that you have been bankrupt remains on your credit file for 6 years from the date your bankruptcy started. As such this record will remain for some considerable time after you are discharged. Your credit rating will therefore still be poor.

Having said that there are various things that you can do to improve your credit rating after discharge from Bankruptcy. These include checking your credit file for errors and starting to use a credit repair credit card.

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