Bankruptcy is a debt solution for people who are unable to pay
their unsecured debt each month. People entering bankruptcy will
have more unsecured debt than equity in any other assets (such as a
house or shares in a company). Sometimes an IVA is a suitable solution
for people with debt problems and considering bankruptcy, however
should the IVA fail then bankruptcy may be applicable.
The bankruptcy debt solution is only available for people who
live in England, Wales and Northern Ireland. The Scottish
equivalent is sequestration.
If you want to receive specific advice on bankruptcy for you,
then call our telephone money advisors on 0800 085
0226. Debt Support Trust is a registered money advice
charity helping people across the UK. Alternatively, take the debt
You can petition for your own bankruptcy or if one of your
unsecured creditors is owed at least £750 they can petition for
your bankruptcy. In April 2009 the Debt Relief Order (DRO) was made available as a new
route into bankruptcy. The DRO is an easier and cheaper route to
become bankrupt but only people who meet the qualifying criteria
can enter the solution. If you owe less than £15,000, you don't own
your own home, have less than £50 disposable income every month and
don't have any assets worth more than £300 then the DRO could be
suitable for you. Please note, if you own a car worth up to
£1,000 then you are still applicable for a DRO.
Cost of entering Bankruptcy
The cost of entering Bankruptcy is £705 which is split between
the administration fee (£525) and the court fee (£180). If you are
on a low income or in receipt of benefits you may qualify to only
pay the £525 administration fee. This fee must be paid when
you submit your documents to the court and credit or debit cards
are not accepted.
To proceed with bankruptcy you would complete the necessary
forms, including the statement of affairs and form 6.27. You then
submit the forms to the local court and will be appointed an
Official Receiver. If the Official Receiver believes you can afford
to pay money each month to your solution then they will implement
an Income Payment Order (also known as an Income Payment
Too often we speak to people at Debt Support Trust where they
have entered bankruptcy without seeking professional debt advice.
This can mean that assets, like a house or car, are being sold when
they originally believed they would not be considered in the
It's for this reason we strongly recommend getting bankruptcy
help before proceeding. You can receive help from your Citizens
Advice Bureau, or call our charity helpline on
0800 085 0226.
What is not included in Bankruptcy?
There are some debts which are not included in a bankruptcy. For
instance, if you owe money to your student loan this cannot be
included within your bankruptcy. Similarly, if you have any secured
debts, these are not included and you should maintain payments to
these debts. This is typically the case if you have a
mortgage on your property with a secured loan too. If you are
unable to maintain payments to your secured loan then you would
risk your property being repossessed.
If you have questions about the bankruptcy process or your
eligibility to declare yourself bankrupt, you can call, email or
post it on our bankruptcy forum.
Our bankruptcy forum means whatever your bankruptcy question,
our debt advisers can answer it quickly.
Benefits of bankruptcy
- You will no longer have to deal with your creditors.
- Once your bankruptcy is completed you will be able to start
again financially without any debt.
- You no longer have to make payments towards your creditors. If
you have available disposable income you will have to contribute
this under an Income Payment Order for 3 years.
Negatives of bankruptcy
- Your credit rating is likely to be severely affected.
- You cannot acquire credit of £500 or more without disclosing
you are bankrupt.
- You cannot be a director of a limited company.
- You may lose your home and car.
- Some empoyers will not allow you to enter bankruptcy and in
doing so you could lose your job. You should check your contract of
- If you receive income for employment, a private pension or any
other form of income which is not state benefits then you may be
asked to make payments to your bankruptcy for 3 years.
Criteria to enter bankruptcy
Your unsecured debt must be above £750 to enter bankruptcy
You will need to complete forms provided by The Insolvency
Service or your local court
You must be able to pay the fee to enter the bankruptcy