The Restrictions and implications of Bankruptcy

Bankruptcy is often seen as a solution to those in severe financial difficulty and unable to repay their debts. It is one of several solutions available and for many it is seen as a last resort due to the impact it can have on property owners. While it can be a way out of debt, it is important that anyone considering bankruptcy is aware of the potential implications and restrictions that may be imposed.


When an individual is made bankrupt, they will lose control of any assets they own. This will include property (including their home), any savings they may have, and their car, should it be worth more than £2,500. Assets are generally sold in order to raise funds to repay outstanding debts.

Further credit

Whilst the Bankruptcy order is in place (usually for 12 months), an individual cannot borrow more than £250 without first telling the lender of their situation. It is possible that if the loan application is successful, the interest rate will be far higher than usual. Furthermore, as the bankruptcy will be noted on the credit records, it is possible that even after the end of the bankruptcy restrictions; obtaining credit at a reasonable rate of interest will be difficult.

Career impact

While bankruptcy restrictions are in place, there are certain roles that an individual cannot undertake. For example, they cannot be a member of the Law Society, be an Insolvency Practitioner or a Chartered Accountant. Furthermore, the individual cannot act as a company director, nor be involved with the setting up, running or promotion of a company without the court’s permission. There are other roles that are affected; therefore it is important to seek advice before making any decisions.

Credit record

A bankruptcy order will be noted on the individual's credit record for a period of 6 years from the order being placed. This may have implications in gaining further credit and / or a mortgage.

Publication of the bankruptcy

Details of the bankruptcy will be recorded in the Insolvency Register. This is a publically available record and will contain the details of the individual such as name, address, date of birth, occupation and details of the insolvency on record. These details will be kept on cord until the bankruptcy order is complete. The bankruptcy will also be reported in the London Gazette. This can cause difficulties for those wishing to keep the bankruptcy order from family and friends.

These restrictions usually apply for 12 months, however this can be extended by the courts if they feel the individual may be at risk.

As with any debt solution, it is very important to seek advice from a licensed money adviser or Insolvency Practitioner, or from one of the non fee charging organisations such as the Citizens Advice Bureau (CAB), National Debtline or the Consumer Credit Counselling Service (CCCS).