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Does Bankruptcy allow an individual to “get away” with not paying his (or her) debts?

We do not view bankruptcy as an “easy option” for debtors. 

Whilst bankruptcy does allow individuals to get back on their feet, it also means that for a period of time the bankrupt’s conduct is heavily scrutinised by an independent insolvency practitioner, and various restrictions are placed on the individual during the period of bankruptcy, including in relation to the application of his income and expenditure. 

A bankrupt individual is listed on a public register and may not be involved in the formation or management of a limited company during the period of bankruptcy. He may also not be a director of a company whilst he is in bankruptcy.

The Trustee in Bankruptcy may sell assets of the bankrupt including his home, and may pursue friends or family of the bankrupt who the bankrupt has transferred assets to.  A bankrupt will also have a poor credit rating and may find it difficult to obtain credit for up to 7 years after the end of bankruptcy (being the period after which credit records are cleared). 

If the Trustee in Bankruptcy discovers conduct of the bankrupt that has acted irresponsibly, recklessly or dishonestly, or that the bankrupt has infringed any of the restrictions during the bankruptcy, then the Trustee in Bankruptcy may apply to court for a bankruptcy restrictions order.  Further, if the bankrupt has deceived or misled the Trustee in Bankruptcy, or breaches the terms of any bankruptcy restrictions order, the bankrupt may receive a custodial sentence for contempt of court or otherwise under the Perjury Act 1911.

The Trustee in Bankruptcy may sell assets of the bankrupt including his home, and may pursue friends or family of the bankrupt who the bankrupt has transferred assets to.  A bankrupt will also have a poor credit rating and may find it difficult to obtain credit for up to 7 years after the end of bankruptcy (being the period after which credit records are cleared). 

If the Trustee in Bankruptcy discovers conduct of the bankrupt that has acted irresponsibly, recklessly or dishonestly, or that the bankrupt has infringed any of the restrictions during the bankruptcy, then the Trustee in Bankruptcy may apply to court for a bankruptcy restrictions order.  Further, if the bankrupt has deceived or misled the Trustee in Bankruptcy, or breaches the terms of any bankruptcy restrictions order, the bankrupt may receive a custodial sentence for contempt of court or otherwise under the Perjury Act 1911.

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