When an individual is subject to a bankruptcy order, he or she is subject to a range of disabilities or restrictions until discharged from bankruptcy.

These disabilities or restrictions are imposed by a variety of sources including the Insolvency Act 1986 (IA86), the Company Directors Disqualification Act 1986 (CDDA86) and other Acts of Parliament, regulations under consumer legislation and local government bye-laws. The Enterprise Act 2002 (EA2002) introduced BROs, IBROs and BRUs to impose restrictions on bankrupts whose conduct has been dishonest, reckless or otherwise culpable (see section on restrictions applicable against an individual subject to a BRO/IBRO or BRU).

The restrictions imposed provide a means of public protection in return for the bankrupt being able to make a fresh start. This part looks at the restrictions imposed on undischarged bankrupts by IA86 as amended by EA2002 and CDDA86. See section on restrictions which apply where an individual is subject to a BRO/IBRO or BRU.

If a person subject to a bankruptcy order wishes to obtain credit to the extent of £500 or more, either alone or jointly with another person, they must disclose the fact of their bankruptcy (or that their estate has been sequestrated in Scotland) to the person from whom they seek to obtain credit1. Failure to disclose the fact of their bankruptcy will render the bankrupt guilty of an offence. If credit is incurred contrary to the law, it is still a valid post-bankruptcy debt for which the bankrupt remains liable.

The £500 limit is for the total amount of debt incurred with a single lender but the limit can also be reached through a series of transactions each smaller than £500 provided that all the transactions were with the same lender and in total add up to £500 or more - as soon as the limit of £500 has been reached, the offence is triggered. Where the bankrupt has committed more than one offence of this type (i.e. obtaining credit with a number of lenders each for an amount (or total amount) of £500 or more without disclosing the bankruptcy), then all such offences should be considered together for the purposes of a BRO allegation or a criminal referral.

Obtaining credit is specifically stated to include cases when goods are bailed under hire-purchase agreements and conditional sale agreements and also to include payment made to the bankrupt in advance for the supply of goods or services2.

1. Section 360(1)(a)