For people with extreme levels of debt who don’t have the means to repay what they owe, bankruptcy can be the only way to deal with their debt and get a fresh start on life.
But given the restrictions placed on an individual during an undischarged bankruptcy, it should only ever be considered as a last resort.
In this article we’ll explain what is meant by an undischarged bankruptcy, what restrictions you will face during a live bankruptcy, and what alternatives to bankruptcy are out there for people who are struggling to repay their debt.
Why choose YourDebtExpert?
What does an undischarged bankruptcy mean?
Undischarged bankruptcy is when a person’s bankruptcy is still in progress and has not yet been completed.
This means that the official receiver – the bankruptcy trustee who administers the arrangement – is still dealing with the bankrupt person’s finances. and they have not yet been discharged from their debts.
Undischarged bankruptcy can last for up to six years, depending on the person’s financial circumstances, after which the bankrupt person will be discharged and all their debts will be written off.
During this time, the bankrupt person will have certain restrictions placed on them, such as not being able to obtain credit or to act as a company director for a business.
How long does it take to discharge a bankruptcy order?
Insolvency Act 1986
Under the law dictated by the Insolvency Act of 1986, discharging a bankruptcy typically takes around 12 months from the date you file.
‘However, there are a few things that can affect this timeline.
For example, if you have unsecured debt, like credit card debt, that is discharged in bankruptcy, the creditors may object to the discharge.
If this happens, your bankruptcy case could be delayed.
Additionally, if you fail to complete the required credit counseling or debtor education courses, your bankruptcy discharge could be delayed.
Finally, if you have previously been through bankruptcy, it may take longer to discharge your debts.
Ultimately, though, most bankruptcies are discharged within 12 months of filing.
Is a bankruptcy discharged automatically during the usual bankruptcy process?
The discharge of a bankruptcy occurs when the official receiver has been satisfied that all requirements have been met and all debts have been paid off.
This usually takes around 12 months from the date you file for bankruptcy in the UK.
However, there are certain circumstances which can lead to an early discharge. This includes making a lump sum payment or paying off all of your creditors in full.
If you are looking to be discharged from bankruptcy earlier than the usual 12-month period, it is important to seek professional advice so that you can understand the best way forward.
Are there bankruptcy restrictions if your bankruptcy hasn’t been discharged?
Once an individual is discharged from bankruptcy, they are no longer legally responsible for repaying their debts.
However, there are certain restrictions that are placed on undischarged bankrupts who are still in a live arrangement.
During this time, the bankrupt individual will be unable to obtain new credit or loans and will likely have difficulty accessing existing lines of credit.
This restriction applies until the bankruptcy is discharged, which can take up to six years.
It is important to note that credit restrictions are only temporary and will end once the bankruptcy is discharged.
In most cases, you are not allowed to travel outside the country during bankruptcy.
This restriction applies until your bankruptcy is discharged which, as previously stated, can take up to six years.
While there may be a travel restriction in place, you may still be able to obtain permission from the court or trustee if you wish to travel for specific reasons, such as to attend a funeral or for work.
Ultimately, the decision on whether you can travel lies with the court or your bankruptcy trustee,
although it’s important to note that bankruptcy restrictions work differently in Northern Ireland than in the rest of the UK.
In the UK, it is against the law for an undischarged bankrupt to act as a director of a limited company or any other corporate body.
Furthermore, if you have been declared bankrupt in the past, you will likely be disqualified from becoming a company director for at least two years.
How we helped Paige
It was literally the best decision of my life, and it has actually changed my life, cheesy as that sounds, it has changed my life.
Paige , IVA Customer
What happens when you’re discharged from bankruptcy?
Once you’re discharged from bankruptcy in the UK, your debts will be written off and you will no longer be legally responsible for repaying them.
The discharge process usually takes between 12-18 months depending on your individual circumstances, including which assets you have surrendered to your bankruptcy.
Rebuild your credit score
After being discharged, it is important to start rebuilding your credit score.
It can take some time to make yourself more attractive to lenders, but it is possible to do so by regularly making payments on time,
taking steps to reduce your debt, and diversifying your credit portfolio.
You should also speak with a qualified financial advisor or debt professional about any options that may be available for rebuilding your credit score.
Keep track of your future finances
It will also be important to keep track of your finances in order to avoid falling into debt again, as this could lead to you becoming bankrupt once more.
With the right advice and support, you can take back control of your finances and start building a brighter financial future.
How do I provide proof that I’m a discharged bankrupt?
When you are discharged from bankruptcy, you can apply for a Certificate of Discharge which is proof that your bankruptcy has ended and all your debts have been written off.
Your certificate will carry details including:
- Date of birth
- Current address and previous addresses
- National Insurance Number
- Court reference number
This certificate should be kept in a safe place as it will be necessary to provide it when applying for new credit or loans. It typically costs £70 to purchase.
It is also important to note that while the discharge is final, you may still have to pay certain debts or court fines which are not covered by the discharge.
In this case, it is advisable to speak with a qualified financial advisor or debt professional who can provide advice on how best to manage these outstanding payments.
Are there alternatives to bankruptcy for someone struggling to pay their debts?
If you’re struggling financially, bankruptcy may seem like the only way out.
But there are other options available, and professional debt advice can help you find the best solution for your situation.
Each option has its own benefits and drawbacks, so it’s important to speak to a debt advisor to see which one is right for you.
With the right debt solution in place, you can manage your debt payments, get your finances back on track, and start rebuilding your credit score.
So if bankruptcy is not the right choice for you, don’t despair – there are other options available. Seek professional debt advice today to find the best way forward.
Where can I get advice on repaying money owed to creditors?
If you owe huge amounts of money to multiple creditors and you don’t have the income necessary to repay those debts, it’s understandable if you’re considering bankruptcy, but given the restrictions it places on your life, as well as your assets, there may be better options out there.
That’s why it’s important to get the advice of a debt professional. At Your Debt Expert, our debt specialists help thousands of people deal with their debt each year.
They can explore your options and help you make an informed decision based on your financial circumstances.
To find out more about bankruptcy and other debt relief options, talk to a friendly debt specialist today on 0800 082 8086.
Where can I get more advice on Undischarged bankrupt: What does it mean? and other debt solutions?