The length of Bankruptcy was reduced from 3 years to 12 months after the introduction of the Enterprise Act (2002).
Can the Length of Bankruptcy be Extended or Shortened?
The length of Bankruptcy is 12 months in most cases. However the Official Reciver does have the power to extend this period in certain circumstances by requiring you to accept a Bankruptcy Restrictions Undertaking (BRU).
A BRU extends some of the restrictions put upon you as a bankrupt person. The extension will normally last 3 years but could be longer.
Bankruptcy cannot last for less than 12 months. Up until 2013 the Official Receiver had the power to grant early discharge. However this option was taken away in October 2013 with the introduction of the Enterprise and Regulatory Reform Act.
It is unlikely your bankruptcy will be extended with a BRU. It only happens if you do not cop-operate with the Official Receiver or have acted improperly before going bankrupt.
How long does Bankruptcy affect your Credit Rating?
The record of your bankruptcy remains on your credit file for six years from the start date. This means that your credit rating is unlikely to recover fully for a number of years after the bankruptcy itself has ended.
There is absolutely nothing you can do to change this date or make it any shorter. The length of time the record remains on your file is legally prescribed.
Having said that once you have been discharged there are a number of things you can do to start improving your credit rating. These include changing incorrect default dates and using a credit repair credit card.
What if you have to make Payments towards your Debts?
After you go bankrupt the Official Receiver will review your income and living expenses budget. If you have any surplus income you will be required to pay this towards your debts.
The payment is made in the form of an Income Payment Agreement (IPA). This runs seperately from your Bankruptcy and once issued will last for 3 years.
An IPA can be set up at any time during the 12 months you are Bankrupt. It may be that you could not afford to make payments at the beginning. However if your financial situation improves you will be asked to start an IPA from that point. It will then last for 3 years.
You will be discharged from bankruptcy after 12 months even if you have an IPA. However you still have to continue making the agreed payments for 3 years from the date they started.