What is bankruptcy?

If you have no real way of paying off your debts and few assets, then bankruptcy could be a suitable option.

Bankruptcy involves selling your assets and sharing the money among your creditors. It releases you from most of your debts, usually after 12 months. If you go bankrupt, most of your creditors won’t be able to chase you to pay or take you to court.

You might be able to declare yourself bankrupt if:

you can’t afford to pay back what you owe
the value of your possessions is less than the amount you owe

How to apply for bankruptcy

If you’re applying to become bankrupt, you must complete an online application and create an online account through the insolvency service.

Basic things you will need to provide information about your:

debts
employment/income
pension
bank accounts
assets
outgoings.

Your application will be reviewed by an official adjudicator who works for the Insolvency Service. They’ll decide if you’ll be made bankrupt.

You usually get a decision within 28 days of submitting your application.

How much does it cost to go bankrupt?

It costs £680 to apply for bankruptcy and you’ll need to pay this before you submit your application.

If you can’t afford the fee you might be able to break the £680 up into instalments.

*The costs of Bankruptcy can vary slightly based on where you live in the UK

Benefits

You can apply to make yourself bankrupt if you can’t pay your debts.
Someone at the Insolvency Service will look at your application and decide whether to accept it.
Bankruptcy usually lasts for 12 months.
When it ends, your outstanding qualifying unsecured debt will be written off. giving you a fresh start.
You’ll only be asked to make payments towards your debt if you can really afford to.
Available in England, Wales and Northern Ireland
Your lenders will stop chasing you for payments.

Considerations

Bankruptcy can seriously affect your credit rating.
Its important to check if it’s suitable for you and consider other ways to deal with your debt.
You may have to reveal you’ve been made bankrupt when applying for future jobs, credit applications and tenancy agreements etc
If you own your home, you may have to sell it to help cover what you owe.
You may also have to sell other non-essential items that you own.
It costs £680 in England and Wales and a similar amount in Northern Ireland (the exact amount depends on your situation)

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