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 test below.

Bankruptcy Advice

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 £20,000, you don’t own your own home, have less than £50 disposable income every month and don’t have any assets worth more than £1,000 then the DRO could be suitable for you.

The cost to enter a debt relief order is £90 which you must pay to apply.

Cost of entering Bankruptcy

The cost of entering Bankruptcy will vary depending on where you are in the UK. If you’re in Scotland you should check our Sequestration page. The cost of bankruptcy in England and Wales is £130 application fee and £550 for the bankruptcy deposit (£680 in total). In Northern Ireland the cost is £137 court fee, £525 bankruptcy deposit and £7 solicitors fee (£669 in total).

This fee must be paid when you submit your application or you can make payments to save for your bankruptcy. Your application cannot be submitted until you have made the full payment.

To proceed with bankruptcy you would complete the necessary online forms and make your payment to be entered into the solution.

Too often we speak to people 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 bankruptcy solution. Also, there are guidelines on acceptable levels of expenditure and if you have a disposable income you could be asked to pay this into the bankruptcy solution.

It’s for this reason we strongly recommend getting bankruptcy help before proceeding. You can receive help from 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.

You must continue to make payments to necessary expenditure like gas, electricity and council tax once you are in the bankruptcy solution. Failure to make these payments could mean you gather new debt which won’t be included in your bankruptcy.

Bankruptcy Questions?

If you have questions about the bankruptcy process or your eligibility to declare yourself bankrupt, you can call or email our trained debt advisors to seek specific advice about your situation.

You must continue to make payments to necessary expenditure like gas, electricity and council tax once you are in the bankruptcy solution. Failure to make these payments could mean you gather new debt which won’t be included in your bankruptcy.

Benefits of bankruptcy

  1. You will no longer have to deal with your creditors.
  2. Once your bankruptcy is completed you will be able to start again financially without any debt.
  3. 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

  1. Your credit rating is likely to be severely affected.
  2. You cannot acquire credit of £500 or more without disclosing you are bankrupt.
  3. You cannot be a director of a limited company.
  4. You may lose your home and car.
  5. Some employers will not allow you to enter bankruptcy and in doing so you could lose your job. You should check your contract of employment first.
  6. 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 the online application

  • You must be able to pay the fee to enter the bankruptcy solution

We Have The Answers

You can make yourself bankrupt by completing bankruptcy forms and paying the necessary fees. You will be asked to complete the Debtor’s bankruptcy petition along with a statement of your affairs. You should then find out when your local court deals with bankruptcy petitions and make your way to the court with your money and application forms.

You will be asked to make your payment and submit your forms. The judge will decide if it’s appropriate for you to enter bankruptcy.

After the order had been made by the judge an Official Receiver is appointed to manage your bankruptcy. It is the job of the Official Receiver to assess your income, outgoings, pension, assets, bank statements and the debts. Should the Official Receiver believe you are able to make a payment towards your bankruptcy they will ask you contribute under an Income Payment Order for 3 years.

The forms to enter bankruptcy are available from your local county court. You can search for your local court by visiting

You can also download online from the Insolvency Service. The link for the bankruptcy forms is here:

Bankruptcy lasts for 1 year only. After the year is complete you will be debt free and the debt, along with interest and charges, will be written off. You may be asked to contribute under an Income Payment Order which would last for a total of 3 years.

Obtaining credit after a bankruptcy can be difficult. Your credit file will remain with a default for 6 years. This will impair your credit score and mean you may not be able to obtain credit for some time after your bankruptcy. If you are able to obtain credit it may mean a higher than usual interest rate.

Your debt will be cleared under bankruptcy at the end of the solution. After the year long bankruptcy you will no longer owe the unsecured debt which you borrowed. Interest and charges are frozen and get written off at the end of the solution.

Your bankruptcy will be recorded within the London Gazette and also within the Insolvency register. The London Gazette is a subscription only publication which is used within the financial institution. The Insolvency register is available to access online.

Your interest and charges on your debt continue to accrue until the end of your bankruptcy when they are written off. You should expect to continue to receive statements from your creditors until you have been discharged from your bankruptcy at the end of a year.

An Income Payment Order is a set amount of money which has been determined you must pay towards your bankruptcy by the Official Receiver for 3 years.  If you are considered to have disposable income each month then this will be required for the benefit of your creditors in the bankruptcy.

The amount of monthly payment  you are asked to make in an Income Payment Order is decided by the Official Receiver. If you feel the amount they have set is incorrect you should contact your Official Receiver and explain why you can’t afford the payment. The Official Receiver will use industry financial guidelines, the statement of affairs and necessary documentation to make a decision on how much you can afford.

A creditor will be able to make you bankrupt if you owe them £750 or more by applying to the court. A creditor must have sent you a statutory demand before presenting the bankruptcy petition to the court.

You should contact Debt Support Trust on 0800 085 0226 immediately if a creditor is trying to make you bankrupt.

In bankruptcy the Official Receiver is interested in the equity / value of items. So, if your house is worth £80,000 but your mortgage is £100,000 then the property is in negative equity of £20,000. This means you would be able to retain your property in a bankruptcy if you wished, and could afford the repayments. Should you have realisable equity within your house then you may be asked for the equity. This usually means a sale of the property is required, however if a third party were able to buy out your share of the equity you could retain the property.

The Official Receiver has 3 years from the date you enter bankruptcy to decide if there is any value in the property.

If you owe money to your bank then it’s advisable to change bank account to a basic account with a bank you don’t owe money to. Barclays and Co-op are recognised as the best basic bank account providers for people with bad credit.