What is bankruptcy?
Bankruptcy is a formal, court-based insolvency process in England and Wales for people who cannot pay their debts. An application is made to the Insolvency Service, a fee is payable, and an Official Receiver is appointed to deal with the case.
Most people are discharged from the debts covered around 12 months later, meaning those debts no longer have to be repaid. That is not the same as a clean financial slate: a bankruptcy is recorded on your credit file for six years from the date the bankruptcy order was made and appears on the public Insolvency Register, so obtaining credit is likely to remain difficult well beyond discharge.
Bankruptcy has significant and lasting consequences. Assets, including any equity in your home, may be sold to repay creditors. You may be required to make payments from your income for a period, and there are restrictions on borrowing and on holding certain roles. Not all debts are covered.
Important — consider alternatives first
Bankruptcy has serious and lasting consequences, particularly for homeowners. Before applying, speak to a regulated debt adviser about whether an IVA, DMP, or DRO might be more appropriate for your situation. Free advice is available from MoneyHelper (0800 138 7777), National Debtline, and StepChange.
Could bankruptcy apply to you?
DebtFlowPartners is an introducer, not a debt adviser, and nothing on this page is advice or a recommendation. Bankruptcy is a serious step with lasting consequences, and a regulated adviser can explain what it would mean in your circumstances and set out the alternatives — before you decide anything. Free, impartial debt advice is also available at any time from MoneyHelper, National Debtline and StepChange.
Bankruptcy — general information
Available inEngland & Wales
Typical dischargeAround 12 months
Applied throughInsolvency Service
Application feePayable
Debt at dischargeMost unsecured covered
Home and assetsMay be at risk
Income paymentsMay be required
Insolvency RegisterYes
Credit file impact6 years
What applies to youAdviser confirms