- Debt Solution
Bankruptcy
Bankruptcy is usually considered a last resort but when debts genuinely can’t be repaid and other solutions aren’t realistic, it can offer a clear, legal way to draw a line under them. It’s a formal court process with real consequences, so it’s worth understanding fully before deciding if it’s the right step for you.
- Available in England & Wales.
- In Scotland, the equivalent process is called sequestration, speak to us to find out what applies to you.
*Takes less than 60 seconds. No impact on your credit score to check.
Check if you qualify
- 60 seconds
- No credit impact
- No obligation
Please note that debt solutions may not be suitable for everyone and fees may apply Click Here. Entering into an IVA will impact your credit rating.
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- What is Bankruptcy
What is a Bankruptcy ?
Bankruptcy is a formal, legally binding process for individuals who find they genuinely can’t repay their outstanding debts. It’s available to residents of England and Wales; in Scotland, a broadly similar process is called sequestration.
Once you’re declared bankrupt, your financial affairs are placed under the control of the court, and a trustee or official receiver is appointed to manage the process. It’s also recorded on a public register.
The aim is to help people who owe more than they can realistically repay to regain control of their finances, either by writing off or reducing what’s owed. Because it carries significant legal and financial consequences, it’s typically considered only once other debt solutions have been explored and ruled out or found unsuitable.
At a glance
- A formal debt solution for peopA formal legal process for people who genuinely cannot repay their debts as they fall duele with overwhelming debt but limited income and assets
- Available in England and Wales; Scotland has an equivalent process called sequestration
- Qualifying unsecured debts like loans and credit cards can be included and potentially written off
- Certain debts, such as secured loans and student loans, can't be discharged through bankruptcy
- Offers a legal route to debt relief, but comes with significant restrictions and a lasting credit impact
- Entered on a public register
- How It Works
How does a Bankruptcy work?
What can happen after the 12 months
Income Payments Agreement (IPA)
If you have surplus income, you may need to make regular payments towards your debts, usually for up to three years
Income Payment Order (IPO)
The court can impose this if you don't cooperate with an IPA or have notable surplus income, legally enforcing regular payments from your earnings
Bankruptcy Restrictions Order (BRO)
Imposed in specific cases, such as if you're found to have misrepresented your financial situation, extending restrictions for up to 15 years
- Eligibility
How do you apply for bankruptcy in England and Wales?
Bankruptcy is generally appropriate where you:
Who can start proceedings? You can apply for your own bankruptcy voluntarily through the Insolvency Service if your debts have become unmanageable. Alternatively, a creditor can apply for a “creditor’s petition” through the court if you haven’t met your obligations to them if granted, this starts bankruptcy proceedings against you.
Because bankruptcy carries significant consequences, we’ll always talk through whether a less severe solution could work for you first.
- What's Covered
What debts are included and excluded in a Bankruptcy ?
Bankruptcy generally covers unsecured debts those not backed by an asset like your home or car.
- Usually Qualifying
- Personal loans
- Unpaid credit cards
- Payday loans
- Overdrafts
- Utility bill arrears
- Usually Excluded
- Secured debts you must keep making payments on these to avoid losing the asset
- Student loans generally not discharged through bankruptcy
- Child maintenance arrears remain your responsibility regardless of bankruptcy
- Court fines criminal or civil fines and charging orders are typically not included
Excluded debts remain your responsibility to pay, even while a DRO is in place for your other debts.
- Pros & Cons
Advantages and disadvantages of a Bankrupcy
- Pros
- Legally writes off qualifying debts included in the process
- Creditor harassment and collection activity stop during bankruptcy
- Certain essential assets are protected from being sold
- Follows a defined 12-month timeline, giving a clear endpoint
- Doesn't directly affect a partner's finances, unless debts are held jointly
- Cons
- Significantly affects your credit rating for six years
- Some assets and possessions may need to be sold to repay creditors
- Bankruptcy records are publicly accessible
- Restrictions can limit certain financial activities and employment options
- Strict asset and income limits mean not everyone will meet the eligibility criteria
- Some obligations, like an Income Payment Agreement, can extend well beyond the 12-month period
- Cost & Fees
Know what cost & fees involved?
Applying for bankruptcy involves set costs:
- £130 application fee
- £550 bankruptcy deposit, which acts as a financial safeguard throughout the process
Depending on your income, you may also be asked to enter an Income Payment Agreement (IPA), requiring regular payments from your income for a set period. The specifics how much, and for how long depend entirely on your individual financial circumstances.
- Credit Impact
How does bankruptcy affect your credit score?
Bankruptcy is recorded on your credit file for six years, significantly affecting your credit rating throughout that period even though the bankruptcy process itself usually lasts just 12 months.
Lenders are likely to view you as higherrisk, which can affect your ability to get loans, credit agreements, or even a standard bank account and where credit is available, it may come with higher interest rates or stricter conditions.
Bankruptcy is also a matter of public record via the Insolvency Service, which becomes part of your credit report and can be seen by credit reference agencies, future lenders, and some employers running background or credit checks.
Once the six-year record clears (following successful completion), your credit rating can start to recover, though rebuilding it is a gradual process.
- Alternatives
Is there a better option for you?
Individual Voluntary Arrangement (IVA)
For those with a regular income who want affordable, fixed repayments and to protect assets like their home
Debt Relief Order (DRO)
For those with low disposable income and minimal assets who meet strict eligibility criteria
Debt Consolidation Loan
For those who'd rather combine multiple unsecured debts into one new loan
*to understand what you could qualify for, including any fees or downsides, so you can decide what’s genuinely right for your situation.
- Check Eligibility
See If a DMP Could Work for You
Answer a few quick questions and one of our advisers will get back to you with your options, no cost to check, and no obligation to go ahead.
- Confidential, and never shared without your permission
- No obligation to proceed
- Takes less than 2 minutes
Check if you qualify
- 60 seconds
- No credit impact
- No obligation
Please note that debt solutions may not be suitable for everyone and fees may apply Click Here. Entering into an IVA will impact your credit rating.
- Good to know
Frequently asked questions
Joint bankruptcy (“joint petitions”) is only available to business partners combining shared business debts not to couples. If you and a partner both want to pursue bankruptcy, you’ll each need to file separately and pay the relevant fees individually.
You can apply for your own bankruptcy voluntarily through the Insolvency Service if your debts have become unmanageable. Alternatively, a creditor can apply for a “creditor’s petition” through the court if you haven’t met your obligations to them if granted, this starts bankruptcy proceedings against you.
It’s on the public record, but it isn’t actively publicised. Credit reference agencies, future lenders reviewing your credit report, and some employers running background or credit checks may become aware of it.
No. Only qualifying unsecured debts can typically be included. Secured debts, student loans, child maintenance arrears, and court fines generally remain your responsibility.
There’s a £130 application fee and a £550 bankruptcy deposit. You may also be required to make additional payments through an Income Payment Agreement, depending on your income.
Bankruptcy is recorded on your credit file for six years from the date it’s registered, even though the bankruptcy period itself usually lasts just 12 months.