Debt solutions
Bankruptcy
Bankruptcy is a formal legal process that clears most unsecured debts when there is no realistic way to repay what you owe.
- Most unsecured debts cleared at the end
- Usually discharged after 12 months
- Creditor action against you stops
- Should be used as a last resort
Bankruptcy may not be suitable in all circumstances and fees apply. It will affect your credit rating, and your assets may be at risk.
Bankruptcy at a glance
- Most debts written off
- Most unsecured debts cleared at the end
- Usually 12 months
- You are normally discharged after a year
- Creditor action stops
- Creditors must stop chasing you
- A defined end point
- A genuine fresh start, not years of chasing
The details
Everything you need to know
Bankruptcy is a formal insolvency process for people who can't repay their debts.
When you are made bankrupt, your assets come under the control of the court and a trustee or official receiver who can use them to repay your creditors. You are usually discharged after 12 months when the unsecured debts included in the bankruptcy are written off.
Bankruptcy applies in England, Wales and Northern Ireland. In Scotland the equivalent process is called sequestration.
Living in Scotland? The equivalent process is called sequestration.
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Free initial chat
A confidential conversation with an advisor to understand your situation. No pressure, no obligation.
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Review your options
We explain every debt solution you qualify for. Bankruptcy is only right when other options have been ruled out.
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Apply online
In England and Wales you apply to the Insolvency Service online. An adjudicator decides your application, usually within a few days.
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Discharge
You are normally discharged after 12 months and most unsecured debts are written off. If you can afford it, you may be asked to make payments from your income for up to three years.
Bankruptcy could be an option if you:
- Can't realistically repay your debts within a reasonable time
- Have few assets you would be at risk of losing, or accept that risk
- Want a defined end point rather than years of repayments
If you have significant equity in your home, a stable income or a profession with restrictions, another solution may suit you better. An advisor will talk you through all potential solutions with you to allow you to make an informed decision.
Fees and costs
Initial advice is free. In England and Wales the bankruptcy application fee is £680, which can be paid in instalments before you apply. There is no fee for the support around your application.
Bankruptcy may not be suitable in all circumstances and fees apply.
Weighing it up
Is bankruptcy right for you?
Advantages
- Most unsecured debts written off, usually within 12 months
- Creditors must stop chasing you once you are bankrupt
- No long-term repayment plan unless you can afford one
- Certain items are safeguarded from seizure as part of the bankruptcy process
- A clear end point and a genuine fresh start
Things to consider
- Your home, savings and other assets may be used to repay creditors
- Your credit rating is affected for six years
- It is published on the Insolvency Register and in The Gazette
- Some careers and professions are restricted while you are bankrupt
- You may pay from your income for up to three years if you can afford it
Frequently asked questions
Will I lose my home?
It depends on your circumstances. If your home has equity, it may need to be sold. An advisor will explain what applies to you before you decide anything.
Will my pension be affected?
Approved pension schemes are usually protected in bankruptcy. Money already drawn down and sitting in savings may be treated differently.
Will everyone find out?
Bankruptcies are published on the public Insolvency Register and in The Gazette. Beyond that, there is no requirement to tell your employer unless your contract or profession requires it.
Which debts are not cleared?
Court fines, child maintenance, student loans and debts obtained by fraud are not written off. Secured debts, like a mortgage, are also unaffected.
Can I get free debt advice elsewhere?
Yes. Free, impartial debt advice is available from charities and organisations listed at MoneyHelper.org.uk.
Have a different question? Get in touch. We are happy to help.
Take the first step today
A confidential chat with an advisor costs nothing and could show you options you didn't know you had.
Bankruptcy may not be suitable in all circumstances and fees apply. It will affect your credit rating for six years and your assets may be at risk. Free debt advice is available at MoneyHelper.