i England, Wales and Northern Ireland

What is bankruptcy

What is bankruptcy?

Bankruptcy is a big step but it can be the best thing for some people. Here we look at what it is and how it works.

The rules around debt relief orders (DRO) have changed. These changes could benefit those considering an insolvency solution like bankruptcy. Please take a look at the changes, as for some people a DRO will be a cheaper alternative to full bankruptcy.

Bankruptcy works differently depending on where you live in the UK.

Visit our page on sequestration (Scottish bankruptcy) if you live in Scotland.

Bankruptcy writes off almost all your debts. But it involves fees and can impact different areas of your life, like your job or home.

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Is bankruptcy suitable for me?

Bankruptcy is a form of insolvency. It is normally best for people who cannot pay back debts in a reasonable time.

Assets you own, like your house or car, are usually sold to pay off the debts.

Bankruptcy is not usually the best option if:

Your assets are worth more than your debts, or
All of your regular payments are up to date and you can afford to keep paying them

Your creditors write off your unsecured debts when you are declared bankrupt.

Bankruptcy usually lasts for 12 months and there are many financial restrictions during it.

You are ‘discharged’ when your bankruptcy ends.

Bankruptcy remains on your credit file for six years. This can make it harder to get credit in future.

How do I go bankrupt?

England and Wales

Submit an application to the Insolvency Service.

Scotland

Submit an application to the Accountant in Bankruptcy.

Northern Ireland

Submit two forms to the High Court.

Find out more at the NI Direct government services website.

Common questions about bankruptcy

What debts are included in bankruptcy?

Bankruptcy writes off most of your debts.

Can you petition for joint bankruptcy?

Joint bankruptcy is only available for business partners.

You can include joint debts in a personal bankruptcy but this impact the person you share the debt with.

What is voluntary bankruptcy?

Entering into voluntary bankruptcy means applying to make yourself bankrupt.

Can my creditors make me bankrupt?

The people you owe could make you bankrupt if you do not pay your debts.

Looking at bankruptcy? Get free advice.

Get expert debt help before deciding to go bankrupt.

Use our online debt advice tool to find the best options for you.