One point clears up a lot of confusion straight away. No bankruptcy restrictions undertaking can be made in Scotland now, so nobody will ask you to sign one, and the difference from English bankruptcy explains where that idea comes from.

What follows is who makes an order, what triggers one, how long it runs, what it actually stops you doing, and how you challenge it.

Two people, and only one of them is a judge. Section 155(1) lets the Accountant in Bankruptcy make an order itself, or apply to the sheriff for one.

You have to be told first

Where the Accountant in Bankruptcy proposes to make an order, sections 155(2) to (4) require it to notify you, to tell you that you may make representations, and to take those representations into account before deciding.

That right attaches to an order the Accountant in Bankruptcy proposes to make. Section 155 has no equivalent for a sheriff-made order, which comes through an application instead.

There is a window for making one

Section 158(1) runs from the date of sequestration to the date your discharge becomes effective, and section 158(3) allows a later order or application only with the sheriff’s permission.

Interim orders sit alongside that under section 160, for cases that cannot wait for the full process. What discharge does and does not end covers the timetable an order attaches to.

Conduct before or after the date of sequestration. Section 156(1) says an order must be made where the decision maker thinks it appropriate having regard to the debtor’s conduct.

The discretion is in the word appropriate rather than in whether an order follows. Once that judgement is made the word must does the rest.

The behaviour the section names

The grounds include carrying on any gambling, speculation or extravagance that may have materially contributed to the sequestration.

Note what the Act does not say. The words rash, hazardous and unreasonable are not in the Act at all.

A previous sequestration is a factor, not a bar

Where you have been sequestrated before, section 156(3) requires the decision maker to consider whether you remained undischarged from that sequestration at any time during the five years ending with the date of this one.

That is a bankruptcy restrictions factor and nothing to do with whether you can apply again. How long you must wait before being sequestrated again deals with the entry bars, which run from the award rather than from discharge.

Being investigated is not the same as being subject to an order

An order takes effect when it is made, under section 159(1), and nothing happens to you while the Accountant in Bankruptcy is deciding.

That is the moment to get advice and make representations. It costs nothing and it is the only stage at which the order can be headed off entirely.

It depends entirely on who makes it. Section 159(2) gives the Accountant in Bankruptcy a two to five year range and the sheriff a five to fifteen year one.

The ranges

A bankruptcy restrictions order runs for between two and five years where the Accountant in Bankruptcy makes it.

The order runs from the day it is made, not from your discharge. That is why an order can keep restrictions running long after the sequestration itself would have finished.

Set that against the ordinary position

Without an order, a Minimal Asset Process debtor is discharged at six months with a further six months of conditions, and on full administration discharge is a decision that can be made at any time after twelve months.

A fifteen-year order is a very different proposition from a year of restrictions. Orders at that end of the range come from the sheriff and follow the most serious conduct.

Five things are sourced, each with a statute behind it, and one of the five is not automatic. The order itself carries no list of prohibitions on its face.

The five, and where each comes from

The credit restrictions are not automatic. Section 157(1) lets the decision maker specify that they apply, which means some orders carry them and some do not.

The Accountant in Bankruptcy’s notes for guidance on BRO restrictions say its registrations and decisions team requests the condition on all occasions. That is its practice rather than something section 157 does by itself.

What the credit condition means

While you are undischarged you must tell a lender you are bankrupt if you are borrowing £2,000 or more, or any amount at all if you already owe £1,000 or more.

Utility charges and council tax are left out of that £1,000 calculation.

It is a disclosure duty rather than a ban on borrowing. The offence in section 218(13) is obtaining the credit without telling the lender, and what the lender then decides is the lender’s own business.

Section 157(2) changes what you have to say. Where the condition is applied by an order, you disclose that you are subject to a bankruptcy restrictions order rather than that you are undischarged.

The other four

Section 11 of the Company Directors Disqualification Act 1986 is the one that bites hardest, because it survives your discharge for as long as the order runs. Section 390(5)(a) of the Insolvency Act 1986 covers insolvency practitioners.

Section 31(1)(ba) of the Local Government (Scotland) Act 1973 disqualifies a councillor, and section 69(2)(b)(ii) of the Charities and Trustee Investment (Scotland) Act 2005 disqualifies a charity trustee, subject to a waiver.

And no further list is published

The Accountant in Bankruptcy’s own page says there are further restrictions on holding certain public office positions and jobs, and then declines to list them.

We are not going to fill that gap with a list found elsewhere. Which jobs sequestration affects sets out the bars that are sourced with a statute each, and your professional body’s own rules are the place to check your own role.

No bankruptcy restrictions undertaking can be made now. The 2016 Act provides for orders and interim orders only.

Part 13 of the 2016 Act has been in force since 30 November 2016 and names only orders, interim orders and the effect of recall. An undertaking is a creature of the older regime.

Why the term still turns up

The term still appears on the Register of Insolvencies and in the Accountant in Bankruptcy’s guidance, because undertakings given under the older regime can still be recorded there.

Schedule 2 to the Bankruptcy (Scotland) Regulations 2016 carries a Register of Insolvencies category headed bankruptcy restrictions orders and undertakings, which is where the wording survives.

So a search will find the phrase attached to Scottish material. What the register shows covers how the categories work.

England and Wales genuinely has them

Paragraph 7(1) of Schedule 4A to the Insolvency Act 1986 lets a bankrupt offer an undertaking to the Secretary of State, and paragraph 9 gives it a two to fifteen year life from acceptance.

That is the source of the advice about signing one to avoid a hearing. It is accurate for England and Wales and it has no Scottish application.

Yes, at two separate stages, and the periods are short. Section 159 sets 21 days, 28 days and 14 days once an order is in force.

The timetable

Section 159(8) allows a variation to bring an order to an end earlier than the day specified in it. That is the route to a shorter order rather than to no order at all.

What to do if you are notified

• Read the notice and identify which of the section 156 matters is being relied on.
• Get free advice quickly from Citizens Advice Scotland, StepChange, National Debtline or Advice Direct Scotland.
• Gather the bank statements, accounts and correspondence that explain what happened.
• Make your representations inside the period given rather than waiting for the order.

No, not by itself. Section 38(3)(c) expressly carves an order out of the restoration recall otherwise gives you.

Revocation is a discretion

Section 161(1)(a) says the sheriff may revoke an order where the award is recalled, and section 161(4)(a) gives the Accountant in Bankruptcy the same power on its own recall route.

May, not must. A refusal can be reviewed and appealed under sections 161(2) and 161(5) to (9), and how recall works covers what else it does and does not undo.

What recall does stop

Sections 161(1)(b) and 161(4)(b) both prevent any new order or interim order being made once the award is recalled. An order already in force is a different question.

So recall and revocation are two applications rather than one. Ask about both if you are working towards a recall with an order already against you.

What an order does not reach

Nothing read says a bankruptcy restrictions order affects a bank account, a tenancy, insurance or travel. Whether you can have a bank account and whether you can travel abroad both deal with the claims made about those elsewhere.