Money Advice Service

You need to think carefully about declaring yourself bankrupt. Find out more about what it means then talk to a free debt adviser about whether bankruptcy is the best way to pay off or clear your debts.

This information is for you if you live in England or Wales only.

What is bankruptcy?

  • Allows you to make a fresh start.
  • Writes off all debts you can prove you owe.
  • If you have any assets, they will be taken and used to pay off your debts.

How to apply for bankruptcy

Use our Debt Health Check tool before applying for bankruptcy, to help you work out a plan to tackle your debts more effectively.

If you are applying to become bankrupt, you must complete an online application and create an online account.

You’ll need to provide information about your:

  • Debts
  • Income
  • Outgoings

Including any letters you’ve received from bailiffs or enforcement agents.

Your application will be reviewed by an official adjudicator who works for the Insolvency Service. They’ll decide if you should be made bankrupt.

You usually get a decision within 28 days of submitting your application.

There are many ways to deal with debts and bankruptcy might not be the best solution for you.

You can find out more about how to apply for bankruptcy online on the GOV.UK website.

How much does it cost to go bankrupt?

It costs £680 to apply for bankruptcy and you will need to pay this before you submit your application.

If you can’t afford the fee you might be able to pay in instalments.

To find out more about this, contact the insolvency enquiry line.

Remember to talk to a free debt adviser before you pay the fee to make sure that bankruptcy is the best solution for you.

What happens after I go bankrupt?

After you go bankrupt, an Official Receiver will be appointed within two weeks of receiving your bankruptcy order.

They will assess your:

  • Income,
  • Assets, and
  • Outgoings

In order to decide how they can be used to meet your debts.

You might also be asked to attend an interview with the official receiver.

Your creditors have to make a formal claim to the trustee for the money they are owed.

You can’t make direct payments to them and they can’t ask you for payments.

After a period of time (usually one year), most of your outstanding debts are written off and you can make a fresh start.

Until you are discharged from bankruptcy you will remain under bankruptcy restrictions.

For example, you won’t be able to apply for credit of £500 or more without telling the lender about the bankruptcy.

You can check your discharge date online using the Individual Insolvency Register.

Any credit you do get is likely to be expensive both now and in the future.

Bankruptcy affects your credit rating and credit reference agencies will keep your details on file for a minimum of six years.

Who is bankruptcy suitable for?

If you have no real way of paying off your debts and few assets, then bankruptcy could be a suitable option.

If you are a homeowner it’s worth looking at other options because bankruptcy puts your home at risk of being sold if there is enough equity in it.

If you’re a tenant, your landlord can apply to evict you legally if you have fallen into rent arrears.

It’s really important you don’t make a decision to go bankrupt alone. Talk to a free debt adviser first.

Can I be made bankrupt?

The minimum level of debt for which someone who you owe money to can force you into bankruptcy is £5,000.

The process for being made bankrupt is different.

However, high street lenders rarely use this option and will prefer to work with you to find another way to pay off your debts.

You can find out more about what happens if someone does try to make you bankrupt on the GOV.UK website.

Get free advice about bankruptcy

“We were so ashamed of our debt problems that we avoided telling people. Trying to live life normally and pretend that everything was ok was very difficult.”

Hayley – who runs the Disease Called Debt website and cleared debts of £41,000.

It’s always best to talk things through with an experienced debt adviser before you decide to apply for bankruptcy.

This is because the debt solution that is best for you depends on your personal circumstances.

There are alternatives to bankruptcy, such as Individual Voluntary Arrangements or Debt Relief Orders.

A debt adviser can help you make the right decisions – meaning you could be debt free sooner than you thought.

A debt adviser will:

  • Treat everything you say in confidence
  • Give advice about better ways of managing your money
  • Never judge you or make you feel bad about your situation
  • Suggest ways of dealing with debts that you might not know about
  • Always be happy to talk to you, however small or big your problem is
  • Check you have applied for all the benefits and entitlements available to you

“It is a scary thing to pick up the phone and say you have debt problems, but most people feel a huge sense of relief when they do.”

Debt Camel – personal finance and debt blogger.

You might only need to have one conversation with an experienced debt adviser to make sure that your plan to manage or clear your debts is the right one for you.

If you need more support or don’t know where to start, you’re not alone.

Nearly half of people in debt told us they aren’t sure about the best way to pay off their debts, and that is where a debt adviser can really help you.

More than eight out of ten people who have got debt advice tell us they feel less stressed or anxious and more in control of their life again.

“Debt advice just changed the way I dealt with it. Getting rid of the shame. I am only sorry it took me so long.”

A debt advice client.

The people that let their debts build up before they seek advice often find:

  • Their cards are maxed out,
  • Things have spiraled out of control
  • No-one else will lend to them, and
  • It takes much longer to pay back what they owe.

You can contact a debt adviser in a way that’s best for you – online, over the phone or face-to-face.

So join one of the hundreds of thousands of people we help each year and take the first step to being debt free.

Get free debt advice

Contact the Insolvency Service website

Telephone: 0300 678 0015
Monday to Friday, 9am to 5pm
Find out about call charges

This article is provided by the Money Advice Service.