Bankruptcy

Bankruptcy is a formal legal process for people who can’t pay their debts. In England and Wales you apply to the Insolvency Service, and an Official Receiver deals with your case. It can write off many debts, but it has serious consequences, and it isn’t right for everyone. Please get advice before you decide.

Free debt advice is available

MoneyHelper, StepChange, National Debtline and Citizens Advice all give free debt advice. Please speak to one of them before you decide. Bankruptcy is a big step

What we do and don't do

We don’t run bankruptcy, and we can’t make you bankrupt. We can explain how it works and go through your other options.

We’re authorised and regulated by the Financial Conduct Authority for debt counselling and debt adjusting (firm reference number 666760).

Key Facts

Most unsecured debts are usually written off

When bankruptcy ends, it usually releases you from most of the debts included in the bankruptcy. You must still pay certain debts that the process does not cover.

Bankruptcy usually lasts 12 months

The court usually discharges you from bankruptcy after 12 months. If you have spare income, you may still need to make payments under an Income Payments Agreement or Order for up to 3 years.

Creditors usually can’t chase included debts

Once the court makes a bankruptcy order, creditors generally cannot take action to recover debts included in the bankruptcy. The court treats some debts and secured creditors, such as mortgage lenders, differently.

Your assets may be at risk

The trustee may consider assets such as property, vehicles, savings, and other valuable possessions. Your bank may also freeze or restrict your bank account. The law may protect some essential household and work-related items.

Who can apply

You can apply for bankruptcy in England and Wales if you live there and you can’t pay your debts. Some things can stop you applying, for example if you’re already in certain insolvency processes. Check GOV.UK.

What it Costs

The bankruptcy application fee is £680. You can pay the fee in instalments if you cannot afford to pay it all at once, but you cannot submit your application until the full fee has been paid.

Check the current bankruptcy application fees on Gov.uk

Bankruptcy can have costs and consequences beyond the application fee. Your assets may be dealt with as part of the bankruptcy, and if you have spare income, you may have to make payments under an Income Payments Agreement or Order for up to three years.

How to apply

1 Get advice: Speak to a debt adviser to check bankruptcy is right for you. Free advice is available.

2 Apply online: You apply for bankruptcy online through GOV.UK. The application fee is currently £680, and you must have paid the full fee before you can submit your application.

3 An adjudicator reviews your application An adjudicator at the Insolvency Service checks whether your application meets the requirements for bankruptcy. If accepted, they issue a bankruptcy order. You will normally receive a decision within 28 days, although it can take longer if further information is required.

4 The Official Receiver deals with your bankruptcy After a bankruptcy order is made, the case is passed to the Official Receiver, who will normally deal with the bankruptcy initially. The Official Receiver will usually act as trustee, although an insolvency practitioner may be appointed to take over as trustee.

What happens next

Once you become bankrupt, the Official Receiver will usually deal with your bankruptcy initially. They will review your financial circumstances, debts, income and assets. An insolvency practitioner may later be appointed as trustee.

Assets: Valuable assets, including property and vehicles, may be sold to help pay the costs of bankruptcy and your creditors. Reasonable household items and items you need for your job are generally treated differently.
Income payments: If you have enough spare income, you may have to make payments under an Income Payments Agreement or Order. These payments can normally continue for up to 3 years, including after you have been discharged from bankruptcy.
Credit file: Bankruptcy can remain on your credit reference file for 6 years from the date of the bankruptcy order, which can affect your ability to obtain credit.
Public register: Your name and address are published in the Individual Insolvency Register, and your bankruptcy is also recorded in the Gazette. Your details are normally removed from the Individual Insolvency Register within 3 months of discharge.
Discharge: You are usually discharged from bankruptcy after 12 months. Discharge normally releases you from most debts included in the bankruptcy, although some debts remain payable. Your bankruptcy can last longer if you do not cooperate with the trustee.

Debts covered and not covered

Bankruptcy can usually cover

Credit cards and store cards
Personal loans
Payday loans
Utility bill arrears

Bankruptcy does not usually cover

Court fines
Child maintenance
Student loans
Secured debts, such as a mortgage. The lender can still act against the property

This is a general guide and not a complete list. Your debts and circumstances should be assessed individually. Speak to us or a free debt adviser to understand how bankruptcy could affect you.

Important consequences of bankruptcy

Your assets: you could lose your home, a car or other assets.
Your credit file: bankruptcy stays on it for six years.
Your privacy: your details are published on a public register.
Borrowing: while bankrupt, you must tell lenders you're bankrupt if you borrow over a small amount.
Being a company director: you can't act as a director without the court's permission
Some jobs and professions: your professional status may be affected. Check your contract or professional body.
Bank accounts and tenancies: your bank may restrict or close accounts. If you rent, check your tenancy agreement.
Longer restrictions: if you've behaved dishonestly or recklessly, the court can extend restrictions.
Some debts aren't written off, such as court fines, child maintenance and student loans

Other options to consider before bankruptcy

Bankruptcy is not the only way to deal with financial difficulties. Depending on your circumstances, other solutions may be available. It is important to understand the alternatives before deciding which option is right for you.

Breathing Space

A standard Breathing Space can provide up to 60 days of legal protection while you work with a debt adviser. During this period, most creditors cannot contact you about included debts, take enforcement action or add interest and charges. You still need to make your normal repayments.

Debt Management Plan

A DMP is an informal arrangement to repay your debts, usually through affordable payments. Creditors do not have to accept the arrangement, and fees may apply depending on the provider.

Full & Final Settlement

If you have access to a lump sum, you may be able to offer creditors a one-off payment to settle a debt for less than the full amount owed. Creditors do not have to accept the offer.

Debt Relief Order

A DRO may be available if you have relatively low income and assets and meet the eligibility requirements. Current GOV.UK guidance includes qualifying debts of £50,000 or less, less than £75 a month in surplus income, and limits on assets. A DRO normally lasts 12 months.

Individual Voluntary Arrangement

An IVA is a legally binding agreement to repay some or all of your debts through an agreed plan. It is administered by a licensed insolvency practitioner and usually lasts five or six years.

If you live in Scotland or Northern Ireland.
Bankruptcy and other debt solutions work differently in Scotland and Northern Ireland. The information on this page applies to England and Wales only. If you live in Scotland or Northern Ireland, speak to a debt adviser about the options available to you.