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Going Through Bankruptcy: Legal Documents That Survive (UK)

· 28 min

Note: The following scenario is fictional and used for illustration.

Emma, 38, filed for bankruptcy in September 2024 after her small business collapsed, leaving her with £47,000 in unsecured debts. Two weeks after her bankruptcy order, her solicitor father died unexpectedly, leaving her £85,000 in his will. Emma's bankruptcy trustee claimed the entire inheritance for her creditors. Devastated, Emma called the trustee in tears: "Does this mean my own will is cancelled too? Can I still decide who gets my house when I die? What about the lasting power of attorney I set up for my mum—am I not allowed to help her anymore?"

Emma's confusion is shared by thousands of UK adults facing bankruptcy. In the 12 months ending November 2025, 9,343 individuals entered insolvency in England and Wales. Most people believe bankruptcy erases their legal identity entirely. The truth is more nuanced: while bankruptcy restricts your financial autonomy, most legal documents survive intact—but with important exceptions that directly affect your family's future.

This guide explains exactly which documents remain valid, which get cancelled, and what you need to protect during and after bankruptcy.

Table of Contents

  1. Understanding What "Survives" Bankruptcy Means
  2. Your Will During Bankruptcy: What You Must Know
  3. Lasting Powers of Attorney and Bankruptcy
  4. Personal Identity Documents: Birth Certificates, Passports, Marriage Certificates
  5. Financial Documents You Must Keep During Bankruptcy
  6. Legal Documents You Might Lose: What Gets Cancelled
  7. After Discharge: Which Documents Need Updating
  8. Protecting Your Family's Future During Financial Crisis
  9. Frequently Asked Questions

Understanding What "Survives" Bankruptcy Means

When you're declared bankrupt, understanding what happens to your legal documents starts with one crucial distinction: bankruptcy affects your assets, not your legal identity.

The Insolvency Act 1986 Section 283 defines your "bankrupt's estate" as property with monetary value that vests in your trustee. This includes tangible assets like property and cars, plus intangible assets like bank accounts and shares. Critically, it does NOT include your legal personhood, civil rights, or the ability to make legal decisions about your future.

"Vesting in the trustee" means ownership transfers automatically to your Official Receiver or appointed trustee. They can sell these assets to pay your creditors. But legal documents that confer rights rather than value—like your will or birth certificate—have no resale potential. Your trustee has no interest in them.

Think of it this way: your trustee gets your house, not your marriage certificate. They claim your car, not your right to vote or make medical decisions.

Three categories of documents exist:

Category A: Identity and Civil Status Documents (always survive)

  • Birth certificate, marriage certificate, civil partnership certificate
  • Passport (with rare exceptions explained below)
  • Driving licence
  • National Insurance documentation

Category B: Legal Decision-Making Documents (mostly survive, with specific exceptions)

  • Wills (survive completely)
  • Health and Welfare Lasting Powers of Attorney (survive)
  • Property and Financial Affairs LPAs (cancelled—see Section 3)
  • Advance decisions about medical treatment (survive)

Category C: Financial Documents (ownership changes but document remains)

  • Property deeds (trustee uses them to sell property)
  • Share certificates (transferred to trustee)
  • Insurance policies (may be claimed if they have cash value)
  • Pension documentation (pensions usually protected, but paperwork required)

Sarah discovered this distinction painfully. She thought bankruptcy cancelled her will. In reality, her will remained legally valid—but the £30,000 she intended to leave her daughter was claimed by her trustee because she died eight months into bankruptcy, before discharge. The will document survived; the assets didn't.

The core misconception is that bankruptcy equals losing legal personhood. This is false. You retain all civil rights: the right to marry, vote, make medical decisions, and create wills. Your restrictions are financial only: you cannot be a company director, cannot obtain credit over £500 without disclosure, and must cooperate with your trustee.

Timing matters enormously. A document created before bankruptcy is generally unaffected. Documents created during bankruptcy are valid if within your legal capacity—you can make a will, but you cannot create a trust with assets you don't control. After discharge, no restrictions apply to any documents you create.

Most people are discharged from bankruptcy after 12 months, at which point most restrictions lift. However, bankruptcy can stay on your credit record for six years from the bankruptcy order date, affecting financial applications long after discharge.

Your Will During Bankruptcy: What You Must Know

Your will remains legally valid throughout bankruptcy. This is the single most important fact to understand.

The Wills Act 1837 establishes requirements for a valid will: you must be 18 or over, have testamentary capacity, sign the document, and have two independent witnesses present. Bankruptcy is not listed as a ground for invalidation. You can create a new will during bankruptcy, and you can update an existing will at any point during proceedings.

David was bankrupt in March 2024. In July 2024, he updated his will to appoint new guardians for his children after his relationship with his original guardian choice deteriorated. The will was perfectly valid. Bankruptcy didn't affect his testamentary capacity.

However, assets in your estate may be claimed if you die before discharge.

If you die during bankruptcy—before your 12-month discharge period ends—your estate assets vest in your bankruptcy trustee first. Under Section 306 of the Insolvency Act 1986, creditors are paid in statutory order before any beneficiaries receive inheritances. Your will dictates who inherits, but your trustee determines how much remains after creditor claims.

James's will left £50,000 to his son. He died four months into bankruptcy with £38,000 in unpaid debts. The trustee claimed the £50,000 for creditors. James's son received £12,000. The will was valid; the assets weren't sufficient to fulfill its terms.

Receiving an inheritance during bankruptcy triggers different rules. If someone else dies and leaves you an inheritance while you're bankrupt, that inheritance vests in your trustee under the after-acquired property rules in Section 307 of the Insolvency Act 1986. The timing is critical: the date of death determines vesting, not the date the estate is distributed.

Even if the deceased died before your bankruptcy, if their estate wasn't yet distributed when your bankruptcy order was made, the inheritance may still vest in your trustee. Trustees can claim after-acquired property up to five years after your bankruptcy order if discovered late.

This is exactly what happened to Emma in our opening scenario. Her father died after her bankruptcy order. The £85,000 inheritance went to her trustee to pay creditors.

If you're named as beneficiary in someone else's will, the executor of the deceased's estate must pay your inheritance to your bankruptcy trustee, not to you. Paying you directly creates personal liability for the executor. The one exception: if you're discharged before the estate is distributed, the inheritance is yours.

Lisa was named in her aunt's will. Her aunt died during Lisa's bankruptcy, but the estate took 18 months to settle due to property sale delays. Lisa was discharged after 12 months, six months before distribution. She received her full inheritance because she was no longer bankrupt when the executor distributed funds.

After discharge, your will remains valid but should be reviewed. Your financial circumstances have changed dramatically. Specific bequests may no longer be possible. Named executors may no longer be appropriate, especially if they were creditors or involved in your bankruptcy. Beneficiary priorities may have shifted as family relationships strain during financial crisis.

Even if your entire estate goes to creditors during bankruptcy, your guardianship appointments survive. This is why wills matter even in bankruptcy. If you have minor children, your will's guardian clause controls who raises them if you die—regardless of your financial situation.

Lasting Powers of Attorney and Bankruptcy

Lasting powers of attorney face stricter rules during bankruptcy than wills. The outcome depends on two factors: whether you're the donor or the attorney, and which type of LPA you're discussing.

If you're the donor and go bankrupt, your property and financial affairs LPA is automatically cancelled. The Mental Capacity Act 2005 Section 64 revokes financial LPAs upon bankruptcy. No court order is needed—cancellation is automatic.

Your health and welfare LPA remains fully valid. Bankruptcy doesn't affect medical decision-making. Your appointed attorney can still make healthcare decisions on your behalf if you lose capacity.

Michael, 52, created both types of LPA in 2022. He went bankrupt in 2024. His health and welfare LPA appointing his wife to make medical decisions remained valid. His property and financial affairs LPA was automatically cancelled. His bankruptcy trustee now controls his finances, not his wife.

If you're the attorney and go bankrupt, you must stop acting immediately for any property and financial affairs LPAs where you serve as attorney. Undischarged bankrupts cannot act as attorneys for financial LPAs. You can still act as attorney for health and welfare LPAs because bankruptcy only affects financial powers, not healthcare authority.

You have a legal requirement to notify the Office of the Public Guardian immediately when you become bankrupt.

If multiple attorneys were appointed, the LPA may survive depending on the appointment terms. Sarah and her brother Tom were both attorneys for their father's financial LPA, appointed "jointly and severally" (each can act independently). Tom went bankrupt. Sarah continued acting alone; the LPA survived. If they'd been appointed "jointly" (both must act together), the LPA would have been cancelled entirely.

Debt Relief Orders have the same effect as bankruptcy on LPAs. DROs trigger automatic cancellation of property and financial affairs LPAs. This matters because DROs hit a record high of 43,249 in 2024, representing a 36% increase from 2023.

After discharge, you can create a new property and financial affairs LPA. Discharge removes all LPA restrictions. You can be appointed as attorney again. However, your previously cancelled LPA does not automatically revive—you must create a new one.

After discharge, Emma from our opening scenario created a new property and financial affairs LPA appointing her sister, now that she'd rebuilt some savings and wanted someone to manage her finances if she lost capacity.

What to do if your LPA is affected:

As donor: Notify the Office of the Public Guardian, request cancellation confirmation, and remember your health and welfare LPA remains valid for medical decisions.

As attorney: Immediately stop acting, notify the OPG, inform the donor, and hand over all financial records to the donor or remaining attorneys. If the LPA named replacement attorneys, check the LPA document—they may step in to continue managing the donor's affairs.

Personal Identity Documents: Birth Certificates, Passports, Marriage Certificates

Your identity documents remain completely yours during bankruptcy. They have no asset value and therefore aren't part of your bankrupt's estate.

These documents always stay with you:

  • Birth certificate, marriage certificate, civil partnership certificate
  • Divorce or dissolution certificates
  • Passport (with rare exception below)
  • Driving licence and provisional licence
  • National Insurance card and number
  • Adoption certificates and deed poll name change documents

The rationale is simple: these documents have no resale value, prove your identity or civil status, and cannot be transferred to another person. Destroying them wouldn't benefit your creditors. GOV.UK guidance on bankruptcy possessions lists what can be taken—identity documents aren't included.

Unlike exempt property such as clothing, bedding, furniture, and tools for work (which have value but are exempt because they're essential), identity documents don't even need exemption. They're not assets in the first place.

There is one rare exception: passport confiscation. Courts can confiscate your passport if they believe you'll flee the country to hide assets. This is extremely rare and only happens when there's evidence of deliberate concealment or international asset transfers.

Raj had property in India worth £200,000 that he hadn't disclosed to his Official Receiver. When the OR discovered this, they applied to court for passport confiscation while investigating whether Raj planned to transfer the property to relatives. Once Raj cooperated and properly disclosed the property, his passport was returned after the investigation concluded.

Professional licences and certifications are not cancelled by bankruptcy. Medical licences, solicitor practising certificates, and accountancy qualifications remain valid. However, some professions have separate bankruptcy notification requirements. Solicitors, accountants, and insolvency practitioners must notify their professional bodies.

Bankruptcy may be a professional conduct issue in regulated professions, but that's separate from licence validity. Dr. Singh's GMC registration remained valid throughout bankruptcy. However, she had to disclose her bankruptcy to her NHS Trust employer per her employment contract—a separate requirement from her medical licence.

What you must hand over versus what you keep:

Must hand over to Official Receiver:

  • Bank statements (last two years)
  • Mortgage documents
  • Loan agreements
  • Insurance policies
  • Property deeds
  • Share certificates
  • Pension documentation

You keep:

  • All identity documents
  • Family documents (children's birth certificates)
  • Medical records
  • Employment contracts

Bankruptcy doesn't prevent international travel unless your passport has been confiscated for asset risk. However, it may affect visa applications to some countries. The United States, Canada, and Australia have bankruptcy disclosure questions on visa applications.

Financial Documents You Must Keep During Bankruptcy

You have a legal duty to cooperate with your Official Receiver by providing comprehensive financial documentation. This isn't optional—it's a criminal offence to withhold information.

You must provide to your Official Receiver:

  • Last two years of bank statements for all accounts
  • Last two years of credit card statements
  • Mortgage agreements and property deeds
  • All loan agreements (personal loans, car finance, payday loans)
  • Hire purchase agreements
  • Insurance policies (life, home, car, income protection)
  • Pension documentation (not the pension itself, which is usually exempt, but the paperwork)
  • Business accounts if self-employed
  • Tenancy agreements or lease agreements
  • Utility bills and council tax bills to verify living expenses
  • Payslips (last three months minimum)

The Insolvency Act 1986 Section 333 creates a duty to cooperate with your trustee. Your Official Receiver will require information about what you owe, who you owe money to, your income and expenses, and evidence such as wage slips, bills, and bank statements.

Failure to cooperate is a criminal offence punishable by fine and imprisonment. The practical consequence is more immediate: your discharge can be extended beyond 12 months. A Bankruptcy Restrictions Order (BRO) can impose 2-15 years of extra restrictions.

Claire failed to provide bank statements for an account she'd closed 18 months before bankruptcy. Her Official Receiver suspected asset concealment. Claire's discharge was suspended for six months while investigation continued. Eventually she located old statements proving no hidden assets. The lesson: keep all financial records, even for closed accounts.

What happens to ownership documents:

Property deeds: Ownership vests in your trustee, but the deed remains a valid legal document. Your trustee uses it to sell the property and distribute proceeds to creditors.

Share certificates: Ownership transfers to your trustee. They sell the shares and the certificate is cancelled.

Insurance policies: Life insurance with cash surrender value may be claimed as an asset. Term life insurance (which only pays on death) may be allowed to lapse or continued if needed for dependents.

Car ownership documents (V5C): If your car is sold by your trustee, the DVLA is notified of the new owner.

The key point: the document remains valid to prove what you owned. The ownership itself has transferred to your trustee.

Documents you must keep after bankruptcy for your records:

  • Bankruptcy order (proves your bankruptcy status to creditors who contact you)
  • All correspondence with Official Receiver and trustee
  • Income Payment Order or Agreement if applicable (proves what you're paying to trustee)
  • Discharge certificate (proves bankruptcy ended—essential for rebuilding credit)
  • Receipts for any assets purchased during bankruptcy with OR approval

You'll need your discharge certificate for mortgage applications, business lending, professional roles, and immigration applications. Use Form LOC013 to apply for a discharge certificate if you don't receive one automatically.

You must disclose all accounts: online banks, PayPal, cryptocurrency wallets, trading platforms. Your Official Receiver can request passwords and access to online financial accounts. They may review social media for evidence of undisclosed income or assets.

Tom was bankrupt but continued selling items on eBay, depositing funds to PayPal. His OR discovered this and claimed the £3,200 PayPal balance. Tom's discharge was suspended for six months for non-disclosure.

Not all documents survive bankruptcy intact. Certain professional and financial roles are automatically disqualified.

Company directorships are automatically disqualified. The Company Directors Disqualification Act 1986 states that undischarged bankrupts cannot be company directors. Existing directorships automatically cease upon your bankruptcy order. This applies to all companies: private limited, public limited, and community interest companies.

The restriction ends upon discharge, typically after 12 months. However, it's a criminal offence to act as director while bankrupt, punishable by up to two years imprisonment.

Ahmed was director of his consultancy limited company. When he went bankrupt, his directorship was automatically terminated. He could not act as director even to wind down the company—his wife had to be appointed director to manage closure.

Trustee appointments face automatic disqualification:

  • Charity trustees: Automatically disqualified under Charities Act 2011
  • Pension scheme trustees: Disqualified under Pensions Act 1995
  • Trust fund trustees: May be removed depending on trust deed, but usually automatic disqualification

Some roles have extended disqualification even after discharge. Charity trustees face a five-year disqualification period after discharge.

Priya was trustee of a local food bank charity. Her bankruptcy automatically disqualified her. Even after her 12-month discharge, she had to wait an additional five years before she could be reappointed as charity trustee.

Professional and public appointments:

  • Cannot be: Member of Parliament, local councillor, Justice of the Peace (magistrate)
  • Cannot be: Member of certain professional bodies with bankruptcy clauses (check individual body rules)
  • Cannot be: Insolvency practitioner (obvious conflict of interest)

Councillor Davies had to resign his local council seat when he was declared bankrupt. He could stand for re-election after discharge, but had to wait until the next election cycle.

Financial services and regulated activities:

What does not get cancelled—common misconceptions:

  • Employment contracts: Bankruptcy doesn't automatically terminate employment, though employers may have contractual right to dismiss in financial services or fiduciary roles
  • Trade union membership: Unaffected
  • Professional qualifications: Your law degree, medical degree, or accountancy qualification remains valid
  • Right to vote: Completely unaffected (this is a common American misconception incorrectly applied to UK)
  • Right to marry: Unaffected
  • Right to own property after bankruptcy: You can acquire assets during bankruptcy, though your OR may claim them as after-acquired property until discharge

Bankruptcy Restrictions Orders can impose restrictions for 2-15 years after discharge if you've been dishonest or culpable in your bankruptcy.

After Discharge: Which Documents Need Updating

Once you're discharged from bankruptcy, most restrictions lift. But several documents should be reviewed and updated even though they remain technically valid.

Your will: highly recommended to review and update

Your will survived bankruptcy intact, but your circumstances have changed radically. You should update it to reflect your new reality.

Why update even though still valid:

  • Financial circumstances changed: specific cash bequests may no longer be possible
  • Asset inventory changed: property sold, possessions gone, new assets acquired post-discharge
  • Executor appropriateness: If you named your former business partner (now estranged due to bankruptcy) as executor, reconsider
  • Beneficiary relationships: Family dynamics may have changed during financial crisis

What to update specifically:

  • Remove specific bequests to items you no longer own ("my Rolex watch" was sold by trustee)
  • Update residuary estate clause to reflect current modest assets
  • Consider adding guardianship clause if you hadn't before (you now understand life's fragility)
  • Review executor appointments—choose someone trustworthy who supported you through crisis

Post-discharge, Martin updated his will to remove the clause leaving his £40,000 car to his son (car sold during bankruptcy). He added a percentage-based clause: "70% of my estate to my son, 30% to my daughter" instead of specific amounts, since his estate value is now uncertain.

Property and Financial Affairs LPA: must create new one if needed

Your previous property and financial affairs LPA was cancelled during bankruptcy. It does not automatically revive upon discharge. You must create a new one.

Consider whether you need a new one:

  • If you've rebuilt some assets post-discharge: Yes, create new LPA
  • If you're still in financial recovery mode with minimal assets: Maybe—depends on family situation and health

If you didn't have a health and welfare LPA before, consider creating one now. Your bankruptcy experience highlighted the importance of having someone to make medical decisions if you can't.

LPA registration costs £92—factor this into your post-bankruptcy budgeting.

After discharge, Sophie waited two years to rebuild savings before creating a new property and financial affairs LPA. In the meantime, she created a health and welfare LPA (£92) to ensure her sister could make medical decisions if needed.

Financial documents and proof of discharge:

Apply for your certificate of discharge using Form LOC013 if you don't receive one automatically. Keep your discharge certificate with critical documents—you'll need it for:

  • Mortgage applications (must disclose bankruptcy, certificate proves it's discharged)
  • Business loans or credit applications
  • Some employment applications (financial services roles)
  • Immigration applications (some countries ask about bankruptcy history)

Credit file updates:

The bankruptcy marker stays for six years from the bankruptcy order date, not the discharge date. Check all three credit agencies (Experian, Equifax, TransUnion) show your discharge correctly. Dispute any inaccuracies—a common error is showing bankruptcy as still active after discharge.

Insurance policies and beneficiary designations:

If you're rebuilding financially, consider income protection and life insurance again. Review all policies with named beneficiaries (life insurance, pension death benefits). Update to reflect current wishes—relationships may have changed during bankruptcy.

Karen's life insurance policy still named her ex-business partner as beneficiary (set up when they co-owned their business). Post-discharge, she updated the beneficiary to her sister, avoiding future conflict.

Business and professional registrations (if applicable):

If you're restarting business post-discharge:

  • No longer required to trade in bankruptcy name—can use new business name freely
  • Can be company director again
  • Can apply for business bank accounts without bankruptcy disclosure (unless within six-year credit file period—then must still disclose if asked)

Notify professional bodies that your bankruptcy has been discharged if you notified them of bankruptcy originally.

After discharge, James registered a new limited company for his consultancy business, something he couldn't do during bankruptcy. He chose a fresh company name to signal his new start.

You will be removed from the Individual Insolvency Register within three months of your discharge. Your name will usually be removed from the Land Charges register after five years.

Protecting Your Family's Future During Financial Crisis

Despite bankruptcy's financial devastation, you can still protect what matters most: your family.

What bankruptcy cannot take from your family:

Your guardianship appointments survive entirely. Even if your entire estate goes to creditors, your will's guardianship clause controls who raises your minor children if you die. This is why wills matter even in bankruptcy—they're not just about money.

Your health and welfare LPA survives. Your appointed attorney can still make medical decisions for you, ensuring family involvement in healthcare.

Your funeral wishes survive. Your will can specify burial or cremation preferences, funeral type, and organ donation wishes.

Single mother Zara, bankrupt with £52,000 in debts, had no assets to leave her six-year-old daughter. But she created a will specifically to appoint her sister as guardian instead of letting courts decide. The will cost £99.99. The peace of mind was priceless.

Creating a will before bankruptcy (if you're considering bankruptcy):

If you haven't filed yet, create a will now to lock in guardianship appointments. Your will remains valid throughout bankruptcy and after. Once bankrupt, you can still create or update your will, but doing it beforehand removes one worry during crisis.

If you have significant assets that will be lost anyway, your will won't change that outcome—but it will control non-asset matters: guardianship, funeral wishes, and distribution of sentimental items with low resale value.

Anticipating bankruptcy, David created a will appointing his brother as guardian for his two children and expressing his preference for cremation with ashes scattered at the family beach. When bankruptcy came three months later, he had one less thing to worry about.

What you can leave despite bankruptcy:

Exempt assets can be left in your will: clothing, bedding, furniture, household equipment, and tools for work within reasonable value. Sentimental items with low resale value—family photos, letters, heirlooms worth less than £100, handmade items—often aren't claimed by trustees.

Items acquired after discharge can be freely disposed of in your will. Any property or savings you accumulate post-discharge are yours to leave to beneficiaries.

Your intellectual property may survive if it has no commercial value. Copyright in creative works like books, music, or art may not be claimed.

Despite bankruptcy, craftsman Robert's will left his handmade wooden chess set to his son (resale value approximately £50, sentimental value immense). His trustee didn't claim it as exempt or low value.

Using life insurance strategically (advanced planning):

Life insurance written in trust before bankruptcy can bypass your bankrupt estate and go directly to beneficiaries if set up correctly. This is complex and requires specialist advice—don't attempt without professional guidance.

After discharge, consider term life insurance to rebuild protection for dependents.

Before bankruptcy, Alison had £100,000 life insurance written in trust for her children. When she died eight months into bankruptcy, the £100,000 went directly to her children via the trust, not to her bankruptcy trustee, because the policy was held in trust and established before bankruptcy.

Rebuilding your estate plan post-discharge:

After discharge, you can rebuild financial stability and create a comprehensive estate plan. This is your opportunity to create a will that reflects your values, not just your assets.

Creating a will is a powerful act of recovery. It represents taking control of your future. For parents, including guardianship appointments is the most important clause—regardless of your asset level.

One year post-discharge, Emma had rebuilt £8,000 in savings and secured stable employment. She created a will leaving her modest estate to her daughter, appointing her sister as guardian, and specifying her wishes for a simple funeral. It was the first significant financial decision she made post-bankruptcy, and it felt like reclaiming her life.

Frequently Asked Questions

Q: Does bankruptcy cancel my will in the UK?

A: No, your will remains legally valid throughout bankruptcy. However, any assets you own when you die may still be claimed by your bankruptcy trustee if you die before discharge or receive an inheritance that forms part of your bankrupt estate. Your will itself—the legal document—is not affected by bankruptcy proceedings.

Q: Can I act as an attorney under a power of attorney if I'm bankrupt?

A: It depends on the type of power of attorney. If you're an undischarged bankrupt, you cannot act as an attorney for property and financial affairs LPAs. However, you can still act as an attorney for health and welfare LPAs, as bankruptcy only affects financial powers, not healthcare decision-making authority.

Q: What happens to a lasting power of attorney if I go bankrupt?

A: If you're the donor (person creating the LPA) and you go bankrupt, your property and financial affairs LPA will be automatically cancelled. Your health and welfare LPA remains valid. If you're an attorney and become bankrupt, you must stop acting under any property and financial affairs LPA immediately and notify the Office of the Public Guardian.

Q: Do I need to update my will after bankruptcy discharge?

A: Yes, it's highly recommended. After discharge, your financial situation will have changed significantly. You should review your will to ensure your beneficiaries, executors, and asset distribution still reflect your wishes. Consider whether your named executors are still appropriate and whether any specific bequests need adjustment based on your new circumstances.

Q: Can bankruptcy trustees take my passport or identity documents?

A: Generally, no. Your passport, birth certificate, marriage certificate, and other identity documents are not assets that can be sold by your bankruptcy trustee. However, in exceptional cases where the court believes you might leave the country to hide assets, your passport can be temporarily confiscated. This is rare and only happens when there's evidence of deliberate asset concealment.

Q: What legal documents should I keep during bankruptcy?

A: You must keep all financial documents including bank statements, loan agreements, credit card statements, mortgage documents, and insurance policies to provide to your Official Receiver. Also retain your bankruptcy order, correspondence with your trustee, your discharge certificate, and any income payment agreements. These documents prove your bankruptcy status and eventual discharge.

Q: Can I inherit money while bankrupt and keep it in my will for my children?

A: No. Any inheritance you receive during bankruptcy (from the date of your bankruptcy order until discharge) automatically vests in your bankruptcy trustee and goes to your creditors. This applies even if the deceased died before your bankruptcy but the estate wasn't distributed until after. You cannot "reserve" it in your will because it legally belongs to your trustee, not you.

Q: Can I make a new will during bankruptcy?

A: Yes, absolutely. Bankruptcy does not affect your testamentary capacity (legal ability to make a will). You can create a new will or update your existing will at any point during bankruptcy. This is particularly important if you need to appoint guardians for minor children or update your funeral wishes.

Q: Does bankruptcy affect my life insurance policy?

A: It depends on the policy type. Term life insurance (which only pays out on death) usually continues unaffected. Whole life insurance with cash surrender value may be claimed by your trustee as an asset. Life insurance policies written in trust before bankruptcy may pay directly to beneficiaries without going through your bankrupt estate—but this is complex and requires specialist advice.

Q: How long do bankruptcy restrictions last in the UK?

A: Most people are automatically discharged from bankruptcy after 12 months, at which point most restrictions lift. However, bankruptcy can stay on your credit file for six years from the date of the bankruptcy order. If you receive a Bankruptcy Restrictions Order (BRO) due to dishonest conduct, restrictions can last 2-15 years beyond discharge.

For personalized legal advice about your specific situation, consult a qualified solicitor specializing in insolvency or estate planning.

Need Help with Your Will?

Understanding which legal documents survive bankruptcy helps you protect what matters most—your family's future and your legal autonomy. Whether you're navigating bankruptcy now or rebuilding after discharge, having a valid will ensures your wishes for guardianship, funeral arrangements, and future assets are clearly documented and legally binding.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete will (legally binding when properly executed and witnessed) plus three expert guides. Preview your will free before paying anything—no credit card required.

Explore these related guides to estate planning during financial challenges:

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.

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