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How to Go Bankrupt

Bankruptcy

Bankruptcy is a formal insolvency procedure that can resolve debts you genuinely cannot repay. It is a serious step with significant and lasting consequences, and we will always explore all alternatives first. Our advisers will assess your full situation and explain whether bankruptcy or another solution is more appropriate for you.

Advantages and Disadvantages of Bankruptcy

Bankruptcy provides a definitive resolution but carries serious implications for your assets, employment, and credit. Read the full picture below before making any decisions.

Potential advantages

  • Most unsecured debts are written off on discharge — typically after 12 months
  • Creditors included in the bankruptcy cannot pursue further legal action once the order is made
  • Provides a fixed end point and a clear fresh start
  • The process is straightforward — applications are made online via gov.uk
  • Discharge from most restrictions occurs after 12 months in most cases

Potential disadvantages

  • The application fee is £680, payable before submission — there is currently no fee waiver
  • Assets including your home, savings, and vehicle (if of significant value) may be sold by the Official Receiver to repay creditors
  • If you own a home with equity, your share of that equity passes to the Trustee on the date of the order
  • If you have surplus income after essential living costs, you may be required to make payments for up to 3 years under an Income Payments Agreement (IPA)
  • Recorded on your credit file for 6 years from the date of the order
  • Your name appears on the Individual Insolvency Register — publicly accessible
  • Cannot borrow more than £500 without disclosing bankruptcy status during the 12-month period
  • Cannot act as a company director or manage a business without court permission
  • Certain professions and employment contracts prohibit bankruptcy — check before proceeding
  • Some debts are not included: student loans, child maintenance, court fines, debts from fraud
  • A Bankruptcy Restrictions Order (BRO) can extend restrictions beyond 12 months where misconduct is found

Whether this solution is right for you depends entirely on your individual circumstances. Our advisers will assess your situation and explain all available options before any recommendation is made.

How to Apply for Bankruptcy

  1. Complete the online application via the Insolvency Service portal at gov.uk. The process is completed entirely online — you do not need to attend court.
  2. Pay the £680 application fee. This can be paid in instalments before submitting your application. There is currently no fee waiver available.
  3. An adjudicator reviews your application and, if satisfied, makes a bankruptcy order.
  4. The Official Receiver contacts you to discuss your financial affairs, assets, and income.
  5. You will typically be discharged from bankruptcy after 12 months, at which point most included debts are written off.

Your Assets

This is the most important consideration for most people. On the date the bankruptcy order is made:

  • Your assets (including any equity in your home, savings, investments, and valuable personal property) pass to the Official Receiver or Trustee
  • The Trustee will assess what can be sold to repay creditors
  • Basic household items and tools of your trade are generally protected
  • If you own a home with equity, your share of that equity is at risk — the Trustee may seek to sell or otherwise realise it, sometimes many years after discharge

If you are a homeowner, this is a particularly serious consideration and should be discussed in detail with an adviser before any decision is made.

Income Payments

If you have surplus income after reasonable living expenses, the Official Receiver may require you to enter into an Income Payments Agreement (IPA) or Income Payments Order (IPO). These can last for up to 3 years — longer than the 12-month discharge period.

What Bankruptcy Does Not Cover

The following debts are not written off by bankruptcy:

  • Student loans
  • Child maintenance arrears
  • Court fines (including magistrates’ court fines)
  • Debts arising from fraud
  • Social fund loans

Alternatives to Bankruptcy

Before considering bankruptcy, our advisers will always assess whether an IVA, DRO, or DMP may be more appropriate for your circumstances. Bankruptcy is generally a last resort — not a first step.

Talk to one of our advisers

Complete the form below and one of our advisers will be in touch. There is no obligation and everything is treated in the strictest confidence.

Debt solutions may affect your credit rating and are not suitable in all circumstances. Your individual circumstances will be assessed before any recommendation is made. To find out more about managing your money and getting impartial debt advice, visit moneyhelper.org.uk. Help with Debt Ltd (FCA FRN: 1058208) is an Appointed Representative of Dee Valley Finance Limited (FRN: 811106), authorised and regulated by the Financial Conduct Authority.