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What if I have been told to go bankrupt?

Bankruptcy can write off your debts if you are unable to pay them.

Find out if bankruptcy is right for you
This form of bankruptcy is available in 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.

What is bankruptcy?

You will work with an official receiver when you go bankrupt. This is someone who oversees your case.  

They may take on the role of trustee or set up an insolvency practitioner to act as trustee. A trustee is someone who deals with the people you owe money to, known as creditors.  

They decide which assets (items of value) can be used towards your bankruptcy. They also decide if you will have to make any payments. 

You will need to pay your bankruptcy costs when you apply. You can pay this in instalments if it is too much to pay all at once. Bankruptcy will not start until this is paid in full. 

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.

Assets such as your home or vehicle may be included in your bankruptcy.

Benefits of bankruptcy

  • Interest, charges and debt collection activity will stop 
  • Debts are normally written off after 12 months 
  • You may be able to keep essential household goods 
  • You can do the whole application process online and pay the costs in instalments (England and Wales only)

Risks of bankruptcy

  • The trustee 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 trustee thinks you can afford 
  • You will find it hard to get credit while you are bankrupt 
  • Your bankruptcy is on a public register and will be on your credit file for six years
  • Your bankruptcy may be extended. This means it could last longer
  • It might affect your job 

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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.

How to apply for bankruptcy

  1. Your first step is find out if bankruptcy is right for you. You can use our online debt help tool to find out
  2. If bankruptcy is right for you, we will explain what you need to do next. We will make sure you are clear about how it can affect you
  3. We are here to support you as you apply. Fill in your application, pay the fee and the trustee will deal with the people you owe money to

Video: What is bankruptcy?

Bankruptcy is a form of insolvency that writes off debts if you can't afford to repay them, giving you a fresh start. It's a legal process that's usually suitable if you have little hope of repaying your debts in a reasonable amount of time.

When you make yourself bankrupt, nearly all of your unsecured debts are written off, allowing you to you make a fresh start. Bankruptcy is available for people living in England, Wales and Northern Ireland. If you live in Scotland we’d recommend visiting our website on Sequestration, or Scottish bankruptcy.

In some cases, your creditors can choose to make you bankrupt, but this is usually as a last resort if you can’t, or won’t pay your debts back.

Because all of your debts are written off, Bankruptcy can be a good option. But, it also has some serious implications and shouldn’t be undertaken lightly. So, let’s talk about some of the benefits and risks of bankruptcy.

If you go bankrupt almost all types of debt will be written off, helping you to make a fresh start. Your creditors won’t be able to contact you, or take further action against you such as taking you to court.

Because your debts will be written off you won’t be asked to make any more payments to your debts, and interest, fees and charges will stop. That allows you to make a completely fresh start, and hopefully sounds good. However, there are many risks associated with bankruptcy that you’ll need to consider.

There is a cost to going bankrupt and you'll need to pay this fee before you apply. You can find out about these fees on our website.

If you decide to go bankrupt you may have to sell your home or your car, and you'll lose any savings or shares, although in most cases your pension savings will be safe.

If you rent your home, bankruptcy can also affect your tenancy agreement, and it might make it hard to get a new tenancy agreement. You may find that your job is affected too, especially if you work in the legal or financial sectors.

Bankruptcy will also appear on your credit file for six years. This will affect your ability to take out credit both during, and after your bankruptcy has ended and could limit your borrowing options.

Your bankruptcy will usually last for 12 months, during which time your finances are overseen by the official receiver from the Government Insolvency Service. You might also be ordered to make monthly payments to them for up to three years after your bankruptcy, if you can afford to.

You'll also face other restrictions during your bankruptcy, including the amount of money you can borrow. You won’t be able to borrow more than £500 without telling a lender that you’re bankrupt, and you must co-operate with the official receiver and give them any information they need.

And finally, its really important to get expert debt advice to make sure that bankruptcy is suitable for you and your individual situation.

We offer free debt advice online or over the phone.

We'll help you put together a realistic budget and a recommend the most suitable debt solution for you.

Questions our clients often ask us about bankruptcy

We look at your income, spending and debts. If it looks as though you would find it hard to pay back what you owe, bankruptcy may be an option for you.

Bankruptcy is a legal process that writes off most of your debts. It can affect you in many ways. You need to understand it fully before you decide to go ahead. 

We will look at how bankruptcy can impact you and weigh that up against other debt solutions.

You should never go ahead with bankruptcy without getting free and impartial debt advice first. You can use our free online advice tool.

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 £550 to the official receiver
  • In Northern Ireland: You pay a total of £683. This is a £151 court fee, £525 bankruptcy deposit and solicitor's fees of £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. They are not included in your bankruptcy. Only missed payments (or 'arrears') are. 

Some debts aren’t included in bankruptcy, these include:

Your bankruptcy will be listed on a public register for up to 3 years 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 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
  • Have previously been declared bankrupt in the last six years

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.

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