Bankruptcy advice

Bankruptcy can help you deal with debt that would otherwise take years to clear. But it has serious implications for your future and should never be undertaken lightly.

This solution is only available in England, Wales and Northern Ireland. Bankruptcy in Scotland works differently and is often referred to as sequestration.

Watch: An introduction to bankruptcy

Benefits of bankruptcy

  • It can be one of the quickest ways to give yourself a fresh start.
  • Your unsecured debts are written off.
  • You will receive no further contact from your creditors.

Risks

  • If you have any assets, like a house or car, these may be included in your bankruptcy.
  • It may have implications for your job – for instance you will not be able to act as a company director.
  • You may find it difficult to take out credit, as bankruptcy will remain on your credit file for six years.

Important information about bankruptcy

Bankruptcy should not be taken lightly as it is a big step and any assets you own (e.g. car/house) will usually be sold. Bankruptcy will also be registered on your credit history for six years and could affect your job.

In some cases, you are asked to make monthly payments towards your debts from your available income. This is known as an income payment agreement, and can last for three years.

You should always get expert advice before making the decision to go ahead with it.

Is bankruptcy suitable for me?

Bankruptcy is a form of insolvency and is normally only suitable if you can’t pay back your debts in a reasonable time. Assets you own, such as your house or car, will usually be sold to pay off your debts. This means if your assets are worth more than your debts, or if all of your regular payments are up to date and you can afford to keep paying them, bankruptcy is unlikely to be the best option for you.

Unsecured debts include things like credit cards, personal loans and store cards.

How does bankruptcy work?

If you make yourself bankrupt your creditors write off your unsecured debts. This allows you to make a fresh start. Personal bankruptcy normally lasts for a year.

You can’t borrow any further money during this period and have to declare any changes in your circumstances to the official receiver.

You may be asked to sell valuable assets but you’re able to keep the things you need for day-to-day living.

How much are bankruptcy fees?

Bankruptcy fees vary throughout the UK. In England and Wales you pay a £130 fee to the adjudicator and £550 to the official receiver, a total of £680.

In Northern Ireland the bankruptcy fees are £647. You pay a £127 court fee, a £525 bankrutpcy deposit and a £7 solicitor's fee.

If you have a low income or receive benefits you may be exempt from the court fee, allowing you to go bankrupt for £525.

There are several types of bankrutpcy available in Scotland, these include:

 

Get online debt advice

Use our online tool to get tailored debt advice in around 20 minutes.

Get debt help

Why choose us?

Bankruptcy is a big step, we'll make sure it's the right solution for you.

  • Tailored advice

We tailor our advice to your situation, and you can be confident that if we recommend it, bankruptcy really is your best option.

  • Specialist bankruptcy advisors

Our specialist bankruptcy advisors are available to help you through the process step by step.

What next? Applying for bankruptcy.
  1. The first step is to see if bankruptcy is the right debt solution for you.
  2. If we think that bankruptcy might be right for you then we’ll put you in touch with our specialist bankruptcy team who will support you every step of the way.
  3. Bankruptcy is not the best option for everyone – we may well be able to help you with more appropriate and less severe ways to solve your particular debt problem.

© StepChange Debt Charity 2017

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.