Bankruptcy is a legally binding debt solution if you cannot repay your debts in a reasonable amount of time. It is a formal insolvency process where your debts are written off, available in England, Wales, and Northern Ireland. In Scotland, it is known as sequestration.

To declare yourself bankrupt, you need to fill in an application online at the government website (gov.uk). You must provide details about your debts, income, and outgoings, and pay a fee of £680. An official adjudicator will review your application and decide whether to declare your bankruptcy.

Once your application is approved, your creditors can no longer contact you or take legal action against you. High-value assets like your car or house may be sold to pay off your debts, and you may have to make monthly payments if you earn enough. You will typically be discharged after one year, although if you are required to make payments this may continue for up to 3 years, after which any remaining debt is written off.

It costs £680 to apply for bankruptcy in the UK. This includes a £130 adjudicator fee and a £550 bankruptcy deposit, which is refundable if your application is rejected. You can pay this fee in instalments using a debit or credit card but your application won’t be considered until the fee has been paid in full.

Joint bankruptcy is available for business partners with joint debts who want to wind up the partnership. Couples cannot apply for joint bankruptcy and must apply individually. If one person in a joint debt goes bankrupt, the other person is responsible for paying the full amount owed.

Bankruptcy can have serious implications for your business. As a self-employed business owner, it will be up to the official receiver to decide if you can continue trading. As a limited company director, you must step down from your position during the bankruptcy process and may not manage a limited company without court permission until you are discharged from the bankruptcy.

Bankruptcy allows you to make a fresh start, usually within a year. It eliminates the pressure of dealing with creditors, as all communication goes through an official receiver. You can keep essential belongings and money to live on, and self-employed individuals can keep necessary trade items.

Bankruptcy is recorded on your credit file for six years and is recorded on a public register. You may have to sell your home and high-value assets, and certain jobs are affected. The cost is £680, and it can impact applications for British citizenship and status as a person of independent means.

A bankruptcy record on your credit report can show that you are at a higher risk of defaulting on your repayments and can make it very difficult to obtain credit Bankruptcy is recorded on your credit file for six years after which you can start to rebuild your credit profile.

A bankruptcy petition is when a creditor (or group of creditors) initiates legal proceedings to make you bankrupt if you owe over £5,000 and they have failed to collect the debt through other means. If the court approves, your assets are placed in the hands of an official receiver to repay creditors.

Bankruptcy is unlikely to affect your current employment unless you work in certain professions, such as the financial industry. If you run your own limited business you won’t be able to continue to do so.

Bankruptcy stays on your credit report for six years, even though you are typically discharged after 12 months.

Yes, an adjudicator may deny your bankruptcy application if they believe you can repay your debts or if another debt solution is more suitable for your situation.

Yes, if you owe over £5,000 in unsecured debt and creditors have failed to collect it, they can apply to the court to make you bankrupt through a bankruptcy petition. If approved, your assets will be used to repay the creditors.