What is bankruptcy?

Bankruptcy is a legal process in England & Wales that writes off most of your debts when you genuinely cannot afford to repay them. It is a formal insolvency option — not a sign of failure. For many people, it is the cleanest way to start again. (Scotland and Northern Ireland have their own systems.)

Bankruptcy is not the end

Going bankrupt can feel frightening, but for most people it is a fresh start. The restrictions are temporary and the relief from creditor pressure is immediate.

When bankruptcy might be right

Bankruptcy may suit you if:

• You owe £5,000 or more in total (no upper limit).
• You cannot reasonably repay your debts in a reasonable timeframe.
• You have little or no assets to lose.
• Your income is too low for an IVA or Debt Management Plan.

How it works

1. You apply online through the Insolvency Service at gov.uk/bankruptcy.
2. You pay the bankruptcy fee (£680 in most cases).
3. An Official Receiver is appointed to review your situation.
4. Your assets are reviewed — reasonable household items and basic tools of your trade are protected.
5. Bankruptcy usually lasts 12 months, after which most debts are written off.

Which debts are written off

Bankruptcy clears most unsecured debts:

• Credit cards and store cards
• Personal loans and overdrafts
• Utility arrears
• Council tax arrears that existed on the bankruptcy date

Which debts are NOT written off

Some debts survive bankruptcy:

• Student loans (in most circumstances)
• Court fines
• Child maintenance arrears
• Debts arising from fraud
• Magistrates' court fines

You will still have to repay these after your bankruptcy ends (the order may be paused while you are bankrupt, depending on the debt type).

Alternatives to bankruptcy

If your surplus income is healthy or you own significant assets, a Debt Relief Order (DRO), IVA or DMP may be more appropriate. Use the Surplus Calculator and the Options assessment to compare.

See How to apply for bankruptcy online for the step-by-step application process, and IVA vs bankruptcy for how the two compare.

Where to get free advice

Before applying, speak to a free debt charity:

• StepChange — 0800 138 1111
• National Debtline — 0800 808 4000
• Citizens Advice — 0800 144 8848

England & Wales only. General information, not legal advice.