Bankruptcy in England and Wales

Bankruptcy is a court-backed procedure that writes off most of the debts of a person in England or Wales who cannot pay them. It is one way to deal with debts you cannot pay, and it means you could be free from most of those debts once the process ends¹. Debts included in the bankruptcy are written off when you are discharged, which usually happens 12 months after the bankruptcy order is made². The process is not confidential: your name and details go on a public register, your assets may be sold, and your credit file carries the bankruptcy for six years³.

Bankruptcy is generally seen as a last resort, a formal method of dealing with debt when all other repayment options have failed⁴. It suits people with few assets and little prospect of repaying what they owe, but it has serious consequences: it can affect your job, your bank may freeze or close your accounts, and you can lose your home, vehicles and other possessions⁵. It is not the only formal option. A debt relief order costs less and suits people with very low assets and little spare income, while an individual voluntary arrangement protects a home in exchange for several years of payments. The comparisons of IVA versus bankruptcy and DRO versus bankruptcy set out how they differ.

What bankruptcy is and which debts it writes off

Bankruptcy is a legal procedure used to write off most debts³. An official order is made, your financial affairs are handed to an official receiver, and after a period of time, usually one year, any remaining debts included in the bankruptcy are written off and you are discharged¹¹. The things you own may be sold to pay towards your debts, and if you have spare income you may be asked to pay monthly amounts into the bankruptcy for up to three years¹.

Most ordinary unsecured debts are included. Debts commonly written off in bankruptcy include credit cards, store cards, overdrafts, catalogue debts, utility arrears and benefit overpayments where they are not fraudulent¹². Debts included are written off once you are discharged, not on the day the order is made².

Hire purchase and logbook loan agreements are treated differently. Finance companies often cancel these agreements when you go bankrupt, which means the goods or vehicle must be returned, though in some cases you can keep the goods if you keep paying the debt¹². Mortgages and secured loans are included only in particular circumstances, such as if you surrender the property or the house is repossessed; if you stay in your home you keep paying as normal¹².

Bankruptcy is not confidential. It appears on a publicly accessible register, and it will have a big impact on your ability to get credit in future³. Before applying, most people take free debt advice to check whether bankruptcy is the right route for their circumstances, or whether another solution such as a debt management plan or a token payment arrangement fits better.

Debts bankruptcy does not clear

Some debts survive bankruptcy and must keep being paid. The list is long, and it matters because people sometimes assume bankruptcy clears everything. Debts not cleared by bankruptcy include child maintenance arrears set by the Child Maintenance Service, criminal fines, compensation orders and victim surcharges, debts taken out after the bankruptcy order, fraudulent debts, mortgages and secured debts if you are keeping the home, Social Fund loans, student loans, TV Licence arrears, personal injury compensation court orders, and payments ordered in family proceedings or divorce courts¹².

After discharge, criminal fines and fraudulent debts still need to be paid⁷. Student loans are a common surprise: they are excluded, and the same rule applies in Scotland, where official guidance states that specific debts including student loans, fines and debts incurred through fraud cannot be included and remain your responsibility to pay¹³.

Joint debts are also not written off for the other person. Unless the other person is also going bankrupt, the debt becomes theirs alone and they are responsible for paying the remaining amount in full¹². The same principle applies to guarantors in other insolvency solutions: official guidance on debt relief orders notes that a DRO does not clear the debt for a joint debt holder or a guarantor¹⁴. If you have a joint debt with an ex-partner, such as a mortgage or a loan, your credit files are connected, and how you manage your debts can affect their credit applications and vice versa¹⁵. The page on joint debts and your partner's debts covers this in more detail.

Cost of going bankrupt: £680 in England and Wales

It costs £680 to go bankrupt in England and Wales¹⁶. The total is made up of two parts: a £130 application fee paid to the adjudicator and a £550 bankruptcy deposit¹⁰. Both parts are paid when you submit the application, and the £680 is the same whether your debts are large or small¹⁷.

There are very few ways to reduce the cost. Some charities can help people who genuinely cannot raise the fee, and it is worth asking a free debt adviser before giving up on the option, but the fee itself is fixed¹⁷. If you were made bankrupt before April 2016 and need a certificate of discharge from the court that approved the bankruptcy, there is a £70 fee¹⁸.

The cost is one of the main differences between bankruptcy and the alternatives. A debt relief order costs far less and is designed for people with very little to lose, while an individual voluntary arrangement usually involves fees spread across the payments. The page on what debt solutions cost compares them side by side. Bankruptcy's £680 is payable up front, in full, at the point of application, which is why some people who would otherwise choose bankruptcy end up in a different solution while they save for the fee.

How to apply for bankruptcy online

If you are applying for your own bankruptcy in England or Wales, you must apply online at www.gov.uk/bankruptcy¹¹. You do not need to attend court². The process is:

1. Get free advice first, to check bankruptcy suits your circumstances and no better option is being missed¹¹.
2. Complete the relevant bankruptcy forms online, covering your debts, assets, income and spending².
3. Pay the £680 fee¹⁷.
4. An adjudicator reviews your application and decides whether to make a bankruptcy order⁷.
5. If the order is made, the official receiver takes over your case and your assets and income are assessed¹.

Self-application must be done online via the gov.uk website⁴. The adjudicator is the official who decides whether you qualify, replacing the court hearing that used to be part of a debtor's own application⁷. If the adjudicator refuses the application, you are told why and what your options are.

The application asks for full details of everything you owe and own, so it is worth gathering statements and bills beforehand. Free debt advisers help people complete applications and check the timing, because the date of the order fixes when the 12 months to discharge starts and when any income payments begin¹¹. Advice is free: the section on where to get free help lists the main charities and services.

When a creditor makes you bankrupt: statutory demands and the £5,000 threshold

You do not have to be the one who applies. A creditor owed £5,000 or more by an individual, including a sole trader or a member of a partnership, can apply to the court to have you declared bankrupt⁹. Official insolvency statistics for England and Wales use the same threshold: a creditor owed £5,000 or more can apply to the court to have the individual declared bankrupt²⁰.

The process usually starts with a statutory demand, a formal document asking for money owed from a person or business⁹. Anyone who is owed money can make a statutory demand, and no lawyer is needed²¹. The person receiving it has 21 days to either pay the debt or come to an arrangement²¹. If they ignore the statutory demand or cannot repay the money, the creditor can apply to a court to make them bankrupt⁹. A statutory demand cannot usually be made if the debt is over six years old²¹.

You can sometimes be forced into bankruptcy if your debts are over £5,000 and you have frequently missed payments²². If you receive a statutory demand, it is a warning sign that a creditor is considering court action, and free advice at that point can still open up other routes, such as a payment arrangement, Breathing Space, or a negotiated full and final settlement. The page on statutory demands and creditor bankruptcy petitions covers the deadlines and what to do.

What happens to your home, car and other assets

When a bankruptcy order is made, the things you own may be sold to pay for your bankruptcy and make payments towards your debts, possibly including your home and non-essential possessions worth a lot of money¹. All assets, including a house, land, a car and savings, can be claimed in the bankruptcy²³. Assets may be sold and the money raised goes towards the bankruptcy³.

Your home is the biggest concern for most people. If there is any equity in your home, whether through legal ownership or beneficial interest, it is transferred automatically to the official receiver, who will look to release it by selling the property²². Where there is no equity, the position is different: the official receiver may let you keep your home if there is still no equity after two years and three months¹⁸. The narrow guide does bankruptcy mean selling your home? works through the scenarios, and help for homeowners in arrears covers schemes that exist outside bankruptcy.

Your vehicle is affected whether you have already paid for it or are still paying for it through finance²⁴. If the car is on hire purchase or conditional sale, the agreement may include a clause ending the agreement if you go bankrupt, in which case the lender can repossess the vehicle and sell it, though some lenders may allow you to keep the car²⁴. You may be able to keep your vehicle if a partner, friend or family member pays the official receiver the money they would have raised from a sale²⁴.

Bankruptcy can also have adverse effects on your business and on your pension if you are planning to draw down funds in the next few years²⁵. Essential household goods are generally kept, but items of value that are not essential can be sold. If you pass away while bankrupt, the process continues and your estate is used to pay the trustee's fees and outlays²⁶.

Income payments for up to three years

Being discharged after 12 months does not always end the payments. If the official receiver thinks you can afford it, you may need to pay a monthly amount into the bankruptcy for up to three years²⁷. This is done through an income payments order or an income payments agreement, and the official receiver decides the amount based on what you can afford after essential living costs¹⁰.

The timing works in a particular way. Payments are made for a three-year period which starts in the 12 months before you are discharged, so the last payment falls between three and four years after the bankruptcy⁷. In other words, the payments begin during bankruptcy but continue after discharge.

If you have surplus income, you are expected to pay it into the bankruptcy for up to three years²³. If your income is only benefits, or an assessment shows you cannot afford anything, you will not be asked to pay²⁶. The assessment uses the same kind of budgeting approach as other debt solutions, based on a standard financial statement. If your circumstances change during the three years, the payments can be reviewed, so it is worth telling the official receiver about changes rather than missing payments.

Restrictions while you are bankrupt

There are some things you will not be able to do when you are bankrupt¹. Restrictions last for the 12 months of your bankruptcy, until you are discharged²⁸. The main ones are:

• You cannot borrow more than £500 without telling the lender you are bankrupt²⁹.
• You cannot act as a company director¹⁸.
• You cannot be a charity trustee, an insolvency practitioner, a registrar, or a consumer credit licence holder²⁸.
• You cannot use a different business name if you are self-employed, unless you tell everyone you do business with about the bankruptcy²⁸.
• You cannot change the name of your business if you are self-employed¹⁸.
• You cannot buy a house under the right to buy scheme²⁸.

The borrowing limit is the one most people feel day to day. Official guidance for Northern Ireland gives the same example: you cannot borrow more than £500 without telling the lender you are bankrupt²⁹. The sources differ on one point: one guidance page states you cannot take out credit of more than £2,000 unless you tell the creditor about your status, while another states you cannot take out credit of any amount if at that time you have debts of at least £1,000.

The restrictions exist to protect creditors and deter dishonesty. Bankruptcy restrictions were introduced for the purpose of deterring debtors from misbehaving or being dishonest before or during their bankruptcy, and providing creditors with a level of protection from such debtors once the bankruptcy had ended³⁰. The official receiver can report misconduct before or during bankruptcy, such as hiding assets, obtaining credit knowing it could not be repaid, favouring family members over other creditors, or not paying tax³¹.

Longer restrictions: bankruptcy restrictions orders

The standard restrictions end at discharge, but they can last much longer. If the court finds you have been dishonest or otherwise culpable, it can impose a bankruptcy restrictions order or accept a bankruptcy restrictions undertaking, which extends the restrictions for a set period after discharge. The official guidance list of restrictions on an undischarged bankrupt is for guidance only and may change at any time³².

The court can also stop your discharge altogether if you do not cooperate with the official receiver, and you stay bankrupt until you cooperate¹⁸. This is rare, but it shows why responding to the official receiver's requests matters. The narrow page on bankruptcy restrictions orders and undertakings covers when they are used and how long they can last.

Effects on your job, credit file and insurance

Bankruptcy affects more than your debts. It can affect your employment or future employment, your bank may freeze or close your accounts, and it can lead to the loss of your home, vehicles and other possessions⁵. Some jobs are barred while you are bankrupt, as listed above, and some employers, especially in financial services, ask about bankruptcy in applications. The page on bankruptcy, jobs and being a company director covers the employment side.

Your credit file carries the bankruptcy for six years. Bankruptcy has a big impact on your credit score and will stay on your credit file for six years³³, and you may find it hard to get credit for up to six years³. Credit will be difficult to come by in the future and your credit rating will be affected²². After 12 months you can borrow more than £500 without telling the lender about your bankruptcy, but the record on your file still shapes lenders' decisions for the full six years⁷.

Insurance can be affected too, because insurers ask about insolvency when setting premiums, and a bankruptcy on record can change what you are offered. Bankruptcy can also have adverse effects on your pension if you are planning to draw down funds in the next few years²⁵.

One recent issue concerns motor vehicle finance. If you took out a motor vehicle finance agreement before your bankruptcy or discharge, any claim for redress, for example for mis-selling, belongs to the official receiver, who will submit a claim, and any money received goes to your creditors³⁴. But if you took out the finance agreement after your bankruptcy ended, or if the courts annulled your bankruptcy, you have the right to make the claim and keep the compensation awarded³⁴. The official receiver's pilot with lenders checking whether redress was owed to creditors in bankruptcy estates ended on 31 March 2026, and the official receiver is now exploring options for a wider redress exercise³⁴.

Discharge after 12 months, and when it takes longer

Discharge from debts usually takes place 12 months after the bankruptcy order is granted⁸. An individual is generally declared bankrupt for 12 months, or until they are discharged⁴. At discharge, the terms of the bankruptcy no longer apply and you are usually released from the debts included in it⁷.

Discharge is not quite the end of everything. Income payments, if there are any, continue for their full three years⁷. The bankruptcy stays on your credit file for six years³³. And discharge can be delayed: the court can stop discharge if you do not cooperate with the official receiver, and you stay bankrupt until you cooperate¹⁸.

Your name and bankruptcy details are listed on the public register for the duration of your bankruptcy³⁵. Once discharged, you can prove the bankruptcy has ended if a lender or employer asks, and the narrow page on getting discharged from bankruptcy explains how. If you believe the order should never have been made, there is also a route to have it annulled, covered in appealing or annulling a bankruptcy order.

If you are unhappy with how your case is handled

Complaints about how a bankruptcy is being handled depend on who you are complaining about. If you suspect someone of breaking the terms of their bankruptcy, you complain to the official receiver handling the insolvency³¹. You can find the relevant official receiver by searching the Individual Insolvency Register and contacting the Insolvency Service office dealing with the case³¹.

For complaints about an insolvency practitioner, the Insolvency Service runs a complaints gateway: complete and submit the online complaint form, and if you cannot access it, contact the Insolvency Service enquiry line by email or phone³⁶. The Insolvency Service also publishes general help for people using its services, including how to get in touch about a case³⁷. The narrow page on complaining about an insolvency practitioner sets out the stages in order.

In Scotland the route is different: you can talk to your trustee or make a complaint to the Accountant in Bankruptcy³⁸.

How bankruptcy differs in Scotland and Northern Ireland

The process to become bankrupt is different if you live in Scotland or Northern Ireland¹. This page covers England and Wales only.

In Scotland, bankruptcy is often referred to as sequestration, and both terms mean the same thing³⁹. You apply for bankruptcy through an approved money adviser or insolvency practitioner, and in some cases creditors can ask the court to make you bankrupt⁴⁰. To apply, you must live in Scotland or have an established place of business there²⁶. Scotland also has a Minimal Asset Process for people with low assets and low income: you are discharged from bankruptcy six months after it is awarded if you follow the set conditions, and it then takes another six months to finalise⁴¹. During the period after discharge but before finalisation, you must tell a lender you are bankrupt before borrowing more than £2,000⁴¹. Creditors in Scotland can ask the court to make you bankrupt if you owe them at least £5,000⁵. The pages on sequestration and the Minimal Asset Process and debt help in Scotland cover the Scottish system in full.

Northern Ireland has its own insolvency process, a form of insolvency available to those resident there²³, with guidance published by the Department for the Economy³⁷. The fee structure differs: as of April 2026, the fee for presenting a Statement of Affairs is £525 and the debtor's petition fee is £189.00, which is not the same as the £680 charged in England and Wales⁴². The page on bankruptcy in Northern Ireland covers it in detail.

Where to get free help

Bankruptcy is a big step, and free, impartial advice is available before, during and after the process. Free debt advice charities help you check whether bankruptcy is the right solution, complete the application, and deal with the official receiver afterwards¹¹. The main free options are listed in free debt advice: where to get it and what happens, and the full range of formal and informal solutions is set out in debt solutions across the UK.

If you are not sure which debts to deal with first, the guide to priority and non-priority debts explains why some debts, such as rent, mortgage and council tax, carry heavier consequences than others and need attention whatever else you decide. If your debts are connected to a relationship breakdown or coercion by a partner, the pages on joint debts and debt and economic abuse explain the specific protections that exist.

Advice is free from charities and public bodies. Fee-charging companies also sell debt help, and the comparison of free debt charities and fee-charging companies explains the difference. If you are unsure whether an adviser is genuine, the page on how to tell if a debt adviser is legitimate lists the checks.