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Discharge from Bankruptcy

Discharge from Bankruptcy Discharge from bankruptcy normally happens automatically after 12 months. After this you are no longer a bankrupt person.

  • What does discharge from bankruptcy mean?
  • Can your Discharge be suspended?
  • What if you have an IPA?
  • When will your credit rating improve?

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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.

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.

You will not be notified about your discharge. If you want written confirmation you will need to contact the Insolvency Service.

Can your Discharge be Suspended?

If you do not respond to the Official Receiver’s request for information or try to hide assets it is likely to be treated as “non cooperation”. In these circumstances it is likely  your discharge will be suspended until you cooperate.

What if you have an Income Payment Agreement?

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.

After Discharge from Bankruptcy when does your Credit Rating improve?

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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