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THE DISCHARGE PROCESS Discharge
is the term used for when a bankrupt becomes free from the bankruptcy
restrictions and is released from his bankruptcy debts. Discharge does
not mean that any bankruptcy assets not realised (sold to somebody) are
returned to the bankrupt. These stay in the bankruptcy estate.
However, see ‘Bankrupt’s Home under The Enterprise Act 2002’ in
this guide. I was made bankrupt on or after 1 April 2004, when will I be discharged? Under the provisions of The Enterprise Act 2002 everyone is automatically discharged one year after the bankruptcy order unless:
A person has the right to an automatic discharge from bankruptcy one year after the date on which they were made bankrupt – in other words, if someone was made bankrupt on 1 April 2004, they could expect, all other things being equal, to be discharged on 1 April 2005. The automatic discharge after one year applies to all bankruptcy orders, so it doesn’t matter whether or not it is someone’s second, third, fourth, etc, time. Likewise, just because someone is bankrupt for a second time does not prevent early discharge, if appropriate. NB You should note that even after discharge, a bankrupt still has a continuing duty under S333 IA86 to co-operate with the trustee. If he fails to do so, it may be contempt of court. In addition, if the failure is within 12 months of the bankruptcy order, there could be an application for a bankruptcy restrictions order, even if the bankrupt has been discharged. Early Discharge An important point to make here is that a person has no automatic right to receive early discharge from their bankruptcy. The OR will only file the necessary papers when he/she is satisfied that the investigation into the conduct and affairs of the bankrupt is concluded. It follows that it is only suitable for cases where there is to be no further investigation. That is not to say that every asset must have been realised before such a notice can be filed, but what it does mean is that the OR must be satisfied that he/she (and the trustee, if one is appointed) is able to deal with any remaining matters in the bankruptcy. All being well, three months after the issue of the report to creditors (RTC) the early discharge process should begin. The three months is purely an internal deadline to enable the creditors to respond. It is a timescale agreed by the Senior Management of The Insolvency Service. The case is reviewed and if all asset matters and any further investigation matters which have come to light are concluded and still within 10 months of the bankruptcy order, the early discharge letter should be issued to all known creditors – and to the trustee if one is in office. NB If the case is older than 10 months it would not be feasible to begin the early discharge process as the time allowed for creditors to respond and the notice to be filed would remove any benefit and the discharge period should run to the 12 months. Notice
of early discharge is filed at court and the OR serves a sealed copy on
the bankrupt. The date of the court seal is the date of discharge. Entries
will remain on the Individual Insolvency Register for three
months after discharge.
Objections to early discharge Should there be any objections to early discharge at either the RTC stage or intention of early discharge letter stage, these should be considered as to whether they need further investigation and, if so, the early discharge process suspended. It may be started again when they are resolved, providing it is within 10 months of the order. I was made bankrupt before 1 April 2004, how does the Enterprise Act affect my discharge? Transitional Discharge Provisions Standard three year or summary bankrupts were discharged on the earlier of:
People will not receive anything from The Service about their discharge. Second time bankrupts will be discharged at the earlier of:
A person in this situation may apply to the court under S280 for discharge five years after the date of their present bankruptcy – if that date falls before 1 April 2009. Suspension of Discharge There
is no clear cut 'solution' for those whose discharge has been suspended
because the Act is silent on this. Legal advice has been sought
and The Service guidance is that if the bankrupt cooperated and the
suspension of discharge was lifted before 1 April 2005, the
bankrupt benefited from the transitional provisions and was
discharged on 1 April 2005; but if the suspension was not lifted until
on or after 1 April 2005, the old rules will apply; if the bankrupt
still had a further 2 years of their bankruptcy to run, the two
years will run on. |