Bankruptcy Restrictions Undertaking
In most cases Bankruptcy lasts for 12 months. However there are some circumstances where this period could be extended using a Bankruptcy Restrictions Undertaking (BRU).
- When are you at risk of getting a BRU?
- Could you get a BRU if you have Gambling Debt?
- How will a Bankruptcy Restrictions Undertaking affect you?
- What is a Bankruptcy Restrictions Order (BRO)?
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When could you get a Bankruptcy Restrictions Undertaking?
A Bankruptcy Restrictions Undertaking (BRU) extends some of the restrictions placed upon you as a bankrupt person. There are a number of things that could result in a BRU being issued. The most common are:
- Giving away assets or selling them for less than their true value
- Preferential payment of your creditors
- A significant amount of your debt is due to Gambling
- Not cooperating with the Official Receiver (OR)
You are not allowed to give away valuable assets before you go bankrupt in the hope to try and protect them. This is known as a transaction at undervalue. If it happens within 5 years of the date of your bankruptcy the transaction can be overturned.
If you have cash available you cannot pay off one of your creditors before going Bankrupt. This includes debts you owe to family members or friends. This would be a preferential payment.
If you try to hide assets or income this is considered not co-operating with the Official Receiver. If discovered the length of your bankruptcy will normally be extended with a BRU.
Will you get a BRU if you have Gambling Debt?
If you have gambling debt you might get a BRU. However this is not a certainty in every case. It depends on the amount of your debt which is down to gambling.
Generally speaking if a small percentage of your debt has resulted from gambling then you should not be at risk. However if the percentage is more significant (say 50% or more) then the chances of you getting a BRU increase
If the amount of gambling debt you have is large then you may get a BRU even if it is a relatively small percentage of your total debt over all.
The Affects of a Bankruptcy Restrictions Undertaking
In the rare instances that a BRU is issued the date you are discharged will normally remain the same. In other words you will still be discharged automatically after 12 months. Only certain restrictions on your activities will remain.
The ones which which most commonly affect people are:
- Borrowing more than £500 without informing the lender
- Being a company director or managing a limited company
While you remain Bankrupt you must hand over any windfalls you receive to the Official Receiver. After you are discharged you can keep subsequent windfalls even if you still have a BRU.
You should be able to keep a windfall you receive after you are discharged even if you still have a BRU.
What is a Bankruptcy Restrictions Order (BRO)?
If the Official Receiver feels your bankruptcy should be extended they will first ask you to accept this willingly. Given you agree the extension will be a Bankruptcy Restrictions Undertaking (BRU).
If you do not agree the Official Receiver will apply to the Court for the extension to be forced upon you. There will be a Court Hearing where this is decided.
If the Court agrees with the OR they will issue an Order extending the length of your Bankruptcy. This is then called a Bankruptcy Restrictions Order (BRO).
The difference between a BRU and a BRO is whether you accept the extended restrictions willingly or the OR has to enforce it at the Court. A BRO will normally last longer than if you had willing accepted a BRU.
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