When am I discharged from Bankruptcy?
Have you heard the expression 'discharged from bankruptcy' and wondered what it actually meant?
Well, according to the financial dictionary, being discharged is:
"The termination of bankruptcy proceedings, resulting in cancellation of the debtor's obligations".
For anyone whose been made bankrupt, this date is everything. Its the date that their lives turn a page on their previous financial troubles, because it's the date they legally become debt free.
As soon as discharge is granted, they are no longer considered bankrupt, all restrictions placed against them are removed and all their outstanding unpaid debts are legally written off.
In short, they are free of the burden of their debts and free to resume control over their own financial affairs.
As part of the bankruptcy process a certificate of discharge will be issued by the Official Receiver, in line with the terms of the Bankruptcy Order.
In normal circumstances, an individual will be discharged from Bankruptcy automatically after 12 months.
However, sometimes discharge can come sooner and, at present, it is not unusual to hear of bankrupts being discharged after as little as 9 months.
Longer bankruptcy restrictions
But there are occasions when the Official Receiver may consider it necessary to extend the restrictions placed against a bankrupt beyond the normal 12 month term.
When deemed necessary, the Official Receiver can request the Court impose a Bankruptcy Restriction Order (BRO) against the bankrupt.
If the Court agrees to do so, the term that bankruptcy restrictions are imposed will be lengthened for up to a maximum of 15 year.
Whilst is doesn't stop a bankruptcy from being discharged, a Bankruptcy Restriction Order extends the term that bankruptcy restrictions remain imposed over the bankrupt, thus restricting their ability to function normally, in financial terms.
Why would I be subjected to a BRO?
Generally as a result of being held culpable, or responsible for the level of indebtedness you have.
In cases of excessive gambling or reckless spending the Official Receiver will regularly ask the Court to imposed Bankruptcy Restriction Orders (BRO) and terms of 4 to 5 years are no unusual although, of course, each case is assessed on its own merit.
The maximum time limit of a Bankruptcy Restriction Order (BRO) would only be meted out for the most severe cases of willful irresponsibility, criminal activity or fraud.