• Without permissison of the court a bankrupt may not act as a company director or take part in the promotion, formation or management of a limited company. This can have disadvantages if the bankrupt is an entrepreneur. An entrepreneur is someone who creates value by offering a product or service. Entrepreneurs often have strong beliefs about a market opportunity and organize their resources effectively to accomplish an outcome that changes existing interactions.

• You may not obtain credit in excess of £500 without first advising the lender of your bankruptcy and obtaining his permission. Please note that this relates to trade credit as well as personal credit. This can have disadvantages if the bankrupt requires a car, wasjing machine or a service on credit.

• You may not trade in any business other than in your own name unless you inform those parties you will be dealing with of your bankruptcy.

• You may not practice or act as a chartered accountant, solicitor or Justice of the Peace, nor become a member of parliament or your local authority.

Typically bankruptcy lasts 12 months and then you are discharged i.e. you are released from the restrictions imposed on you. It can however last much longer - from 5 years up to even a maximum of 15 years. A Bankruptcy Restriction Order is applied beyond the initial 12 months in cases where the bankrupt was dishonest or especially blameworthy for the bankruptcy. Such cases include when the debt was incurred through gambling, fraud or negligence. However misconduct prior to 1 April 2004 will not be taken into account.

To understand more about bankruptcy or other alternatives such as an IVA call 0800 074 6918, or complete the online form on the left of the page