How long does bankruptcy last?

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Having read our guides you will understand that a period of bankruptcy involves twin processes: i) the settling of your debts, and ii) the placing of various “Bankruptcy Restrictions” upon you during the time it takes to do so. By bearing in mind that bankruptcy, in effect, is a dual process, it’s easier to clarify when bankruptcy can end. So how long does bankruptcy last?

In short you’ll usually be released – or “discharged” – from your debts after 12 months, on the anniversary of the court granting your bankruptcy order. Discharge is automatic and ordinarily frees you from all Bankruptcy Restrictions too. You would also be removed from the Individual Insolvency Register within three months of discharge.

However, in certain circumstances Bankruptcy Restrictions can continue even after you’ve been released from your debts.

Basically, if the Official Receiver believes you to have been uncooperative, dishonest or careless (providing false information, hiding assets, etc.) at any stage, then they can extend the period that Bankruptcy Restrictions apply. Similarly, breaking any of your Restrictions – a criminal offense – would bring the same action.

 Either way, the Official Receiver will ask you to agree to a “Bankruptcy Restrictions Undertaking”, reimposing the original Restrictions but this time for a set period of between two and 15 years.

Should you refuse, the Official Receiver will apply for a “Bankruptcy Restrictions Order” – with the same effect as above, except you’d also have to go to court, further complicating and extending your bankruptcy.

But assuming you observe all Restrictions and cooperate swiftly and thoroughly throughout, you could qualify for “Early Discharge” (from both debts and Restrictions) – i.e. sooner than the automatic 12 months.

While important to stipulate nobody has the right to early discharge, the Official Receiver will always review your case three months after filing their report on your financial situation with your creditors. For the record, this report tends to be filed within 8 weeks from the date court grants your bankruptcy order.

Should the Official Receiver deem there to be no further matters requiring investigation (and your creditors don’t object) they’ll initiate Early Discharge procedures and send notice to the courts. You’ll receive a copy of this notice, stipulating your new discharge date. Still, even successful Early Discharges are rarely completed less than 6 months from the date of your bankruptcy order.

Lastly, there is the possibility that your bankruptcy could be cancelled, or “Annulled”. You may apply for “Annulment” at any point, providing that:

1. Your initial bankruptcy order should not have been granted; or
2. All your debts (including fees/expenses incurred by bankruptcy proceedings) have been paid in full or guaranteed to the courts’ satisfaction; or
3. You reach an agreement with your creditors – known as an “Individual Voluntary Arrangement” – to repay all or part of your debts.

However, even annulment is never immediate. Scenarios 1. and 2. would involve a court hearing, while 3. may take as long as 5-7 weeks to finalise. The necessary form (7.1A) to proceed in scenarios a) or b) is available for free from The Insolvency Service online.