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Personal bankruptcy

Personal bankruptcy

Bankruptcy is a debt solution and a form of insolvency. It’s a legal procedure mainly suited to people whose circumstances are unlikely to change, and who have little hope of paying off their debts within a reasonable time.

Bankruptcy works differently depending on where you live in the UK. If you’re living in Scotland, please visit our section on sequestration (Scottish bankruptcy). If you live in England, Wales or Northern Ireland the information below outlines the bankruptcy process.  

Video: An introduction to bankruptcy

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How does bankruptcy work?

Bankruptcy is a form of insolvency, and normally only suitable if you can’t pay back your debts in a reasonable time. Any assets you own, such as your house, will normally be sold to pay off your debts. This means that if your assets are worth more than your debts, or if all of your regular payments are up to date and you can afford to keep paying them, bankruptcy is unlikely to be the best option for you.

When you make yourself bankrupt, almost all of your unsecured debts are written off, allowing you to make a fresh start. But personal bankruptcy rules mean you will face certain restrictions.

Common questions about bankruptcy

How much does it cost to go bankrupt?

Bankruptcy fees vary depending on where you live in the UK.

In England and Wales you pay a total of £680, made up of a £130 fee to the adjudicator and £550 to the official receiver.

In Northern Ireland the total cost is £676 made up of a £151 court fee and £525 bankruptcy deposit. Solicitor's fees are around £7.

How does bankruptcy work?

When you go bankrupt almost all of your debts are written off, allowing you to make a fresh start. However, declaring yourself bankrupt is a big step that involves fees and can impact many areas of your life, such as your job or home.

In the UK, personal bankruptcy normally lasts for a year. During this time, you can’t borrow more than £500 without letting the creditor know you’re bankrupt.

You must also declare any changes in your circumstances to the official receiver.

You could be asked to sell valuable assets such as your home or car, but you’ll be able to keep the things you need for day-to-day living.

Does going bankrupt clear all your debts?

Most debts are included in bankruptcy. When you’re discharged from bankruptcy, these debts are written off.

Some debts aren’t included in bankruptcy, these include child maintenance arrears, criminal fines and TV licence arrears.

What happens after a bankruptcy discharge?

Your debts are written off and the restrictions placed on you during your bankruptcy are usually lifted. If your bankruptcy was caused by dishonest or reckless behaviour, the official receiver can extend the bankruptcy restrictions through a bankruptcy restriction undertaking (BRU) or order (BRO). 

This can last up to 15 years.

The record of your bankruptcy stays on the Insolvency Register (England and Wales) or Bankruptcy Register (Northern Ireland) for a further three months after you’re discharged, or longer if you have a BRU or BRO.

You may still have to make payments towards your bankruptcy, and the official receiver will decide if you have to do so.