Going Bankrupt
Updated for 2026
Getting help with debt
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Going Bankrupt
– Bankruptcy Is A Beginning – Not An End –
We offer confidential, sympathetic help and solutions for people who are thinking about going bankrupt or entering into a formal debt solution. Whether you are considering bankruptcy, a Debt Relief Order, or need breathing space from creditors, this guide covers your options.
Is it the right solution for you?
May not be suitable in all circumstances. Your credit rating may be affected. Fees apply on successful applications which will be advised and built into your payment plan.
– Eligibility Check –
You could include the following debts:
More details on Debt Solutions
Debt Relief Order
About DROs (Debt Relief Order)?
A Debt Relief Order (DRO) is a formal debt solution for people who owe up to £50,000 and have very few assets. It is free to apply and can write off your qualifying debts after 12 months
Debt-Free after 12 Months
DRO Benefits
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Duration
Lasts for 12 months in total at the end of which your debts are written-off.
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Legal Protection
Creditors can no longer proceed with legal action once the Debt Relief Order has been approved.
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Payments
You are not required to make any monthly repayments.
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Interest & Charges
Interest and charges are frozen once the Debt Relief Order is approved.
DRO Considerations
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Fees
Since April 2024, the DRO application fee has been removed entirely, so there is no cost to apply. You apply through an Approved Intermediary, who will guide you through the process.
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No homeowners
Not available to homeowners -
Credit Rating
The Debt Relief Order will be recorded and have a negative impact on your credit file for a period of 6 years.
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Public Register
Your personal details will be recorded on the Insolvency Register which is a public record.
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Change in Circumstances
If your circumstances change during the 12-month period and you no longer meet the eligibility criteria, it is likely that the application will be canceled, and you will need to make alternative arrangements to pay your debts.
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Employment
A Debt Relief Order may impact upon your employment; therefore, you should always check the terms of your employment contract before making an application. You are also unable to be a company director unless you have permission of the court.
Individual Voluntary Arrangements (IVA)
About IVAs
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between an individual and their creditors. It is a solution that allows a person to only repay a percentage of their unsecured debt to their creditors in affordable monthly payments, usually over a fixed term of five or six years.
IVA Benefits
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Assets Protected
If you are a homeowner, your home will be protected and not put at risk of being sold.
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Affordable Payment
One affordable, monthly repayment which makes your finances much easier to manage.
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Timeframe
A set time period (usually 5 or 6 years), giving you a countdown to becoming debt free.
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Legal Protection
Once approved, creditors can no longer proceed with legal action against you.
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Peace of Mind
Creditors are no longer able to contact you regarding your debts.
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Interest & Charges
Interest and charges are frozen once your proposal has been approved.
IVA Considerations
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Fees
There are fees payable for the work completed in setting up and managing your IVA, however, these fees are taken out of your monthly repayments and are NOT in addition to the payments made to your creditors.
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Credit Rating
An IVA will be recorded and have a negative impact on your credit file for a period of 6 years.
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Public Register
Your personal details will be recorded on the Insolvency Register which is a public record.
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Equity Release
If you are a homeowner, you may be required to release equity from your home in order to help repay your debts. If you are unable to remortgage, the IVA may be extended for 12 months instead.
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Windfalls
If you receive a windfall such as an inheritance or a lottery win, you are required to pay a proportion of this into the IVA.
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Approval
Creditors may decide not to approve the proposed Arrangement.
Bankruptcy
Bankruptcy is a legally binding debt solution to resolve a debt problem that cannot be resolved. In Scotland, this is sometimes called sequestration. You can read more in our detailed guide to bankruptcies<\/a>. You can read more in our detailed guide to bankruptcies.
Bankruptcy Benefits
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Duration
Bankruptcy often lasts for only 12 months in total.
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Legal Protection
Once approved, creditors can no longer proceed with legal action against you.
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Peace of Mind
Creditors are no longer able to contact you regarding your debts.
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Interest & Charges
Interest and charges are frozen once the bankruptcy application has been approved.
Bankruptcy Considerations
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Assets
If you own a home or possessions of significant value, these items could be sold to help repay your debts.
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Fees
There is an application fee of £680, although this can be paid in installments.
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Payments
You could be asked to make payments towards your debts for a period of up to 3 years.
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Credit Rating
Bankruptcy will be recorded and have a negative impact on your credit file for a period of 6 years.
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Public Register
Your personal details will be recorded on the Insolvency Register which is a public record.
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Employment
Bankruptcy may impact your employment; therefore, you should always check the terms of your employment contract before making an application. You are also unable to be a company director unless you have permission from the court.
If you wish to see if you are eligible for Bankruptcy, our expert team of Advisors are here to help.
Debt Management
A Debt Management Plan (DMP) is an informal agreement between you and your creditors that has been negotiated, usually by a third party, to lower the monthly payments being paid to your creditors. A DMP is arranged on your behalf by a third party which can either be a debt charity or a fee charging company. If you chose to use a fee charging company, there will usually be set up fees and a monthly management fee which will normally be included within your monthly payment.
DMP Benefits
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Affordable
One affordable monthly repayment which is then distributed between each of your creditors.
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Peace of mind
Most contact from creditors will be dealt with by the Debt Management company on your behalf.
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Interest & Charges
Creditors may agree to reduce or freeze interest and charges, although this is not guaranteed.
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Free Service
Debt charities offer a Debt Management Plan free of charge. Find out more from the Money Advice Service.
DMP Considerations
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Timescales
One affordable monthly repayment which is then distributed between each of your creditors.
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Fees
A debt management company may charge fees for their services.
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Priority Bills
Such as rent, council tax and utility bills are unlikely to be included in the plan.
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Credit Rating
A Debt Management Plan is likely to have a negative impact on your credit rating, making it more difficult to obtain credit in the future.
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No Legal Protection
Creditor can choose to continue with their debt collection process, which can lead to further action such as a default or County Court Judgment.
If you wish to see if you are eligible for a Debt Management Plan, our expert team of Advisors are here to help.
This page is for general information only and does not constitute financial advice. If you are unsure about the best option for your situation, seek guidance from a qualified debt adviser.
