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Bankruptcy

Bankruptcy is a way of writing off your debts if you have no other way to pay them. It is a last resort option that offers you a fresh start after 12 months.

Get online debt advice to find out if bankruptcy is right for you
  England, Wales and Northern Ireland only. Find out about bankruptcy in Scotland

Bankruptcy is a legal process that cancels or writes off most of your debts. This means you do not have to pay them back. You will not have to deal directly with the people you owe money to, known as your creditors, once you are bankrupt.

It can give you a fresh start if you are finding it hard to pay back what you owe.

With 30 years’ experience offering free debt help, we will work with you to see if bankruptcy is the right solution for you. We will also consider a wide range of other solutions that could be suitable for your situation.

Is bankruptcy right for me?

Bankruptcy is a form of insolvency. Insolvency is a legal process to get your debts written off, which means you will not have to pay them back.

You can apply to make yourself bankrupt, or your creditors can apply to make you bankrupt if you do not pay them what you owe. This is not something that happens overnight. There are many steps that must be taken before you are declared bankrupt.

There are lots of ways to deal with debt besides bankruptcy. It is important to get debt advice first so you can see what options are open to you.

A fresh start

By going bankrupt you can write off all debts included in your bankruptcy. After 12 months you will usually be discharged from your bankruptcy. At this point you have a clean financial slate, and you can work on recovering your credit file.

You do not have to face bankruptcy alone

You work with an ‘official receiver’ or ‘trustee’ who makes decisions like which assets (items of value) can be sold to repay what you owe, and if you should still be making payments. They deal with your creditors, so you do not have to.

Easy to apply for

If you choose to go bankrupt, it is easy to do the full application online if you live in England or Wales. If you live in Northern Ireland, you will have to fill in the application forms and then attend a hearing at High Court in Belfast. You will not be made bankrupt until you have paid the full bankruptcy fee. In England and Wales, the fee is £680. In Northern Ireland, the fee is up to £683.

Stops creditor contact, interest and charges

When you go bankrupt, creditors for debts included in your bankruptcy are no longer allowed to contact you for payments. Most conversations with creditors will be handled by the official receiver. Creditors also have to stop adding interest and charges to your debt balances.

Benefits of bankruptcy

  • Interest, charges and debt collection activity will stop. Your creditors will stop contacting you completely
  • Debts are normally written off after 12 months. You will not have to pay them back
  • You may be able to keep essential household goods. The official receiver will decide what items are necessary to keep
  • You can do the whole application process online if you live in England or Wales. A bankruptcy application does not automatically make you bankrupt
  • You can pay the costs in instalments. This applies to England and Wales only
  • You will usually be discharged after 12 months. This is a chance to start recovering your credit history. After six years, your bankruptcy will drop off your credit file

Risks of bankruptcy

  • The official receiver may sell assets for you. These are things of value like your home or car
  • You could be asked to pay monthly amounts for three years. This will only be what the official receiver thinks you can afford
  • You will find it hard to get credit while you are bankrupt. This may continue for some time after your bankruptcy too
  • Your bankruptcy will show on a public register. This will last for 15 months
  • Your bankruptcy will show on your credit file for six years. This will make it harder to take out additional credit
  • Your bankruptcy may be extended. This can happen if you break the terms of your bankruptcy
  • It might affect your job. It depends on the type of job you have

Ready to find out if bankruptcy is right for you?

Use our online debt advice service to find out what options you have for dealing with your debt. Start, pause and pick up again in your own time.

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How can I find out if bankruptcy is right for me?

  1. To find out if bankruptcy is right for you, you will need to start by using our online debt help tool
  2. We need to learn more about you to give you advice. Through our online tool, we will ask you for details about yourself and your situation. This includes basic information about you, as well as information about your income, spending and debts. This can be a long process, but you can pause and come back at any time
  3. From the information you gave us, we will give you options on the best ways to deal with your debt. Make sure you read this through before making your choice. You may even be able to apply for Breathing Space. This will give you a break from having to worry about your debts while you get things sorted
  4. If bankruptcy is right for you and you choose to go ahead with it, we will explain what you need to do next. We will make sure you are clear about how it can affect you. When you choose to go ahead with bankruptcy at this stage, it does not automatically make you bankrupt. There are several steps still to take after this stage
  5. We are here to support you as you apply. If you live in England and Wales, you can fill in your application online. If you live in Northern Ireland, you will have to fill in the forms and then attend a hearing at High Court in Belfast
  6. After your application is complete, you will need to pay the fee. In England and Wales, this is £680 and can be paid in instalments. In Northern Ireland, the fee is up to £683 and has to be paid in full
  7. Once the fee has been paid, the official receiver will take over and deal with the people you owe money to

Bankruptcy works differently if you live in Scotland. In Scotland, sequestration or MAP bankruptcy are similar solutions, but have different benefits, risks and fees associated with them.

Common questions about bankruptcy

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

  • In England and Wales: You pay a total of £680. This is a £130 adjudicator fee and a £550 bankruptcy deposit
  • In Northern Ireland: You pay up to £683. This is a £151 court fee, £525 bankruptcy deposit and solicitor's fees of around £7

Most debts are included in bankruptcy. Your trustee will confirm which ones will be written off 12 months after you go bankrupt. 

You must pay your household bills each month. Things like council tax, rates, and utilities are not included in your bankruptcy. Only missed payments (arrears) are. 

Some debts are not included in bankruptcy, these include:

Your bankruptcy will be listed on a public register for up to 3 months after your bankruptcy ends. It is shown on your credit file for six years.

Your debts are written off and the restrictions placed on you during your bankruptcy are usually lifted.

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

The record of your bankruptcy stays on the public register for at least three months after your bankruptcy ends.

Your bankruptcy can last longer if you:

  • Do not co-operate with the trustee during your bankruptcy
  • Have taken out debts before the bankruptcy that you knew you could not pay back
  • Have debts from gambling or fraud
  • Have run a business dishonestly
  • Have given away or sold any goods for less than their value
  • Deliberately made payments to some creditors but not others, including loans from family and friends

Your creditors can make you bankrupt, but this is usually a last resort for them.

When your creditors apply to make you bankrupt, it will affect you the same as it would if you had applied yourself. The only difference is that your creditors pay the bankruptcy fees for you.

They tend not to apply to make you bankrupt unless they are sure they can get their money back.

The best way to try to stop your creditors from making you bankrupt is to contact them and speak to them about your situation.

If they are aware of the reasons you are struggling to pay them back, they might be able to reach an agreement with you that stops the bankruptcy from happening.

It is best to approach them with an accurate budget, showing them your income and spending.

Sometimes speaking to your creditors may not be enough. You should reply to things like statutory demands. We can offer support on how to do this if you need it.

Our bankruptcy guides

If you are thinking about going bankrupt, there are many factors to consider. You will need to clearly understand the consequences and how it affects you and those around you. Our personal bankruptcy guides have useful advice about the entire process.

How do I go bankrupt?

Find out about the process of going bankrupt and what happens at a court hearing.

What is bankruptcy?

Find out more about joint bankruptcy, voluntary bankruptcy, and what happens when a creditor applies to make you bankrupt.

How does bankruptcy affect me?

Find out about bankruptcy affects things like your home, job, car and business.

What happens after bankruptcy?

Find out what happens when you are discharged from bankruptcy and how you might be affected after bankruptcy.

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