Whether a person is made bankrupt by their own petition or by the petition of one of their creditors, the procedure in bankruptcy is the same. The Official Receiver, which is a government body, will initially be responsible for dealing with the bankruptcy. If there are assets belonging to the bankrupt, a trustee in bankruptcy will normally be appointed to take over and deal with the estate. There are legal duties on the bankrupt to co-operate with both.
When a bankruptcy order has been made, the bankrupt must:
- Make their estate available to the Official Receiver or trustee
- Provide an inventory of their estate and such other information as the Official Receiver or trustee requires
- Deliver all documents and records relating to the estate to the Official Receiver or trustee
- Do as directed by the Official Receiver or trustee in relation to the assets of the estate
These duties are designed to ensure that the bankrupt gives all possible assistance to those responsible for dealing with the bankruptcy.
What happens if the bankrupt does not comply
If the bankrupt does not do as required, or there is reason to be believe that he or she is concealing assets, is about to abscond or is otherwise avoiding payment of the bankruptcy debts:
- The trustee may obtain an injunction against the bankrupt or third parties in possession of assets of the estate
- The court may issue a warrant of arrest and seizure of any books, papers or records (including computer and non-documentary records)
- The court may execute documents on behalf of the bankrupt to transfer property
- The trustee may apply to the court for directions to require the bankrupt to do such things as are necessary to assist with the administration of the bankruptcy
- The bankrupt may be required to appear before the court to answer questions
- The Official Receiver or trustee may apply for an order for the re-direction of the bankrupt’s incoming post for a period not exceeding 3 months.
Failure to comply with an order of the court may be dealt with as a contempt of court, which can lead to imprisonment and/or a fine. Failure to comply with some of the bankrupt’s obligations may also be a criminal offence – What a Bankrupt must not do
Taking legal advice
The Official Receiver or trustee has very wide powers in connection with the administration of the bankrupt’s estate and failure to comply with them can have serious consequences for a bankrupt. Some of these powers have been challenged as a breach of the bankrupt’s human rights. Such challenges are not often successful. However, the trustee must still act reasonably and fairly and not in an oppressive way. If you are unsure as to how to proceed in relation to your duties and obligations as a bankrupt, taking good legal advice as soon as possible is very important.
For more information proceed to What a bankrupt must not do
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