What Is a Bankruptcy Restrictions Order (BRO)?
When you declare yourself bankrupt, you enter a 12-month period as an “active bankrupt”. During this time, you’re placed under a certain set of restrictions – if you break them, you might be charged with a Bankruptcy Restrictions Order (BRO).
A BRO is a court order which – depending on its severity – can extend the period you have to follow the restrictions of a bankruptcy from anywhere between 2-15 years. It also places some additional restrictions on you.
In this guide, we’ll be explaining the process, stipulations, and potential consequences of a BRO.
Contents
What Is the Process of a BRO?
The Official Receiver Applies to the Court
If the Official Receiver believes you have violated the rules of your bankruptcy, acted irresponsibly, or been dishonest, they will apply to the court to have you served with a BRO.
When they apply to the court, they’ll have to send you a letter explaining why they’re making the application. If there are 6 weeks or less before your bankruptcy term ends, they won’t have to send you a letter.
You Respond to the Letter
Once you’ve received the letter from the Official Receiver, you’ll have 21 days to respond. You can choose to either accept or challenge the allegations.
If you accept the allegation, you’ll be entered into a Bankruptcy Restrictions Undertaking (BRU) instead of a BRO. The effects of a BRU are the same, but as you’ve admitted culpability, the length of the restrictions are extended is typically reduced.
If you refute the allegations, a court hearing will be scheduled.
Court Hearing Is Scheduled
When the court hearing is scheduled, you’ll have another 14 days to either accept or challenge the allegations. Failing to do this will stop you from taking part in proceedings without the court’s express permission, although you may still attend.
Evidence Is Filed
If you challenge the allegations, you’ll have 28 days to submit your evidence.
You’ll need to send the Official Receiver a copy of this evidence within 3 days of it being sent to court. The Official Receiver may give further evidence in reply to this.
You’ll still be able to change your mind and enter into a BRU right up until the hearing. This is a good idea if you don’t have solid counter-evidence.
Decision Is Reached
Once the hearing is concluded, the court will issue a verdict on whether or not you broke your bankruptcy restrictions. The severity of the BRO will depend on the severity of the allegations.
What Are the Restrictions of Bankruptcy?
Typically, to be charged with a Bankruptcy Restrictions Order, you must violate the restrictions placed on you in bankruptcy. But what are these restrictions?
- You can’t borrow more than £500 without telling the lender you’re bankrupt
- You cannot be a company director
- You’re not allowed to be involved in the creation, management, or promotion of a company
If you’re bankrupt, it’s very important that you keep these restrictions in mind. Failing to stick to the restrictions can result in having to worry about them for a lot longer.
What Actions Can Result in a BRO?
Violating the restrictions of bankruptcy isn’t the only way you can find yourself charged with a BRO. In fact, there are lots of actions that can get you into trouble:
- Borrowing money that you know you can’t repay
- Failing to cooperate with the Official Receiver
- Negligently allowing your debts to increase
- Hiding assets or selling them below market value
- Making preferential payments to creditors (usually to one you have a personal guarantee with)
- Becoming bankrupt many times
This list isn’t exhaustive; any action that could be considered grossly irresponsible or dishonest can serve as the grounds for a BRO. To be safe, you’ll have to make sure you’re being honest and forthcoming with your finances.
What Happens When I Get a BRO?
The Official Receiver will send a notice to all of your creditors to notify them about the Bankruptcy Restrictions Order. This could lead to further complaints being made against you.
Your bankruptcy period will be extended from anywhere between 2-15 years. This means you’ll have to stick to its restrictions for longer. A BRO will also subject you to additional restrictions during this time.
What Additional Restrictions Does a BRO Place on Me?
A Bankruptcy Restriction Order places several additional restrictions on liable individuals:
- Can’t work on education committees
- Unable to work on healthcare committees
- Can’t work in public office
- Cannot be the trustee of a pension scheme or charity
Generally speaking, the extra rules presented by a BRO are in place to protect the public. They prevent you from holding positions of social or public responsibility.
What Happens if I Break the Restrictions of a BRO?
Breaking the restrictions of a BRO is not a very good idea. Breaking the restrictions of bankruptcy isn’t a crime; however, when you receive a BRO, you are legally obliged to follow its restrictions. Any infringements are a criminal offence.
If you break the restrictions of your BRO, you can expect to see your restriction period extended once again. The length of this extension varies by the severity of the infringement. You could also face large fines and, in some cases, imprisonment.
Speak to an Expert Today
If you’re worried about restrictions around bankruptcy, you should get in touch with an Insolvency Practitioner as soon as possible.
Our expert team can help to ensure you’re protected legally, guiding you towards alternative options that can avoid you having to take unnecessary risks. For example, if you’re set on acting as a company director, you may find that an IVA is a more appropriate solution to your debt problems.
Get in touch to arrange a free consultation today.
FAQs
What Is an Interim BRO?
You may be issued with an interim BRO while the court makes a decision on your case. It applies the same restrictions as a regular BRO and is lifted if the court decides not to issue you with a BRO.
What Is a BRU?
A Bankruptcy Restrictions Undertaking (BRU) functions in the same way as a BRO. You’re charged with a BRU when you accept the allegations made against you. A BRU often has a shorter extension period.
What Happens if My Bankruptcy Ends Before My Court Hearing?
You might think this would get you off the hook, but unfortunately it isn’t true. If your bankruptcy period ends, you’ll be charged with an interim BRO while the Court makes a decision. If you’re found to be liable, you’ll be subject to restrictions until the BRO ends.
