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Personal insolvency - Coggle Diagram

- - - - suspension of discharge- automatic discharge can be suspended if bankrupt has been uncooperative or disonest--> leads to further financial restrictions and process bankruptcy process prolonged (t continue to investigate and liquidate assets
      - restrictions on bankrupts
        
        as soon as bankruptcy order made, bankrupt subject to certain restrictions aimed at protecting creditors
        
        business restrictions
        Credit Restrictions: It is a criminal offence for a bankrupt to obtain credit over £500** without disclosing their bankruptcy status**
        
        this makes it difficult for bankrupt to carry on the business
        
        Company Directorships:
        
        A bankrupt cannot act as a director of a company
        
        They cannot manage, promote, or form a company unless granted permission by the court.
        
        Trading Under a Different Name:
        A bankrupt cannot trade under a name other than the one in which they were made bankrupt, without informing all parties they are dealing with that they are an undischarged bankrupt
        Partnership Restrictions:
        A bankrupt automatically ceases to be a partner when they are made bankrupt, unless the partnership agreement specifically allows them to remain a partner
        
        personal restrictions
        Credit and Banking:
        A bankrupt cannot obtain credit over £500 without disclosing their bankruptcy to the lender.
        
        Most banks will only allow the bankrupt to have a current account without overdraft facilities.
        
        Professional Restrictions:
        
        Bankrupts cannot practice as a solicitor or in other professions without the relevant regulatory body's permission.
        
        BROs and BRUs
        Purpose: BROs and BRUs are designed to prevent individuals who are culpable for their bankruptcy from causing further harm. These are applied when the bankrupt is considered to have caused their own bankruptcy due to dishonesty, negligence, or recklessness
        Duration: BROs can last between two and 15 years, depending on the severity of the conduct.
        Consequences of a BRO or BRU:
        
        Directorship Restrictions: The bankrupt cannot act as a company director, insolvency practitioner, or Member of Parliament (MP) during the order’s duration.
        
        Credit Restrictions: The bankrupt cannot obtain credit over £500 without disclosing the BRO or BRU to the lender.
        
        The restrictions are enforceable and carry serious legal consequences if violated.
- - - - Once a bankruptcy order is made, the OR becomes the trustee in bankruptcy and takes control of the bankrupt's assets to sell them and pay off creditors
        
        bankrupt's estate automatically vests in them from the moment the bankruptcy order is made.
        
        trustee can challenge/set aside transactions prior ot bankruptcy order
        
        released after all assets realised and creditors paid as much aspossible.
        
        bankrupts property/interests
        
        exceptions to all property in estate vesting, where bankrupt can retain certain assets for daily living
        
        exempted property- essentials for daily living e.g tools of their trade and household items like clothing and basic furniture
        
        BUT if any items high value, trustee sel and replace with cheaper alternatives
        
        salary
        
        but if their income exceeds the reasonable needs of the bankrupt and their family, the trustee has the right to request an Income Payments Agreement (IPA)- allows trustees to collect portion of bankrupts income to repay creditors
        
        if cannot agree amount to be paid, t can apply for Income Payments Order (IPO), and court determines amount.
        
        both normally lasts 3 years so will survive bankrupts discharge in most cases
        
        bankrupts home
        
        If the bankrupt owns the home, their interest in it becomes part of the bankruptcy estate, and the trustee has control over it
        
        If someone else has a legal or equitable interest in the property, or has a right to live there (such as a spouse or dependent), the bankrupt cannot be evicted immediately. The trustee will need to apply for a court order before the house can be sold.
        
        Order for Sale:
        The court must consider several factors before granting an order to sell the home:
        
        The interests of the creditors.
        
        The needs and conduct of any current or former spouse or civil partner.
        
        The needs of children living in the home.
        
        After 1 year of bankruptcy, the creditors' interests generally take precedence over the needs of others living in the home, unless there are exceptional circumstances.
        
        This means that the trustee is likely to obtain an order for sale after one year, unless the situation is unusual.
        
        Ownership of the Home After 3 Years:
        3 years after the bankruptcy order is made, ownership of the home is generally transferred back to the bankrupt, unless one of the following occurs:
        
        The trustee has sold the property.
        
        The trustee has applied for an order for sale or possession of the home, or has obtained a charging order over the property.
        
        The trustee has entered into an agreement with the bankrupt, allowing the bankrupt to keep their interest in the house, possibly by making a payment or agreeing to a settlement.
      - responsibilities:
        
        ask debtor for statement of affairs (financial position and recent transactions)
        
        further investigate debtors financial affairs
        
        protect debtors assets and take steps to safegaurd them e.g. selling perishable goods/those decreasing in value to max value for creditors
      - private trustee appointment- if debtor has sufficient assets to cover costs, may appoint one. performs similar duties to OR