What is Bankruptcy?

Bankruptcy frees you from overwhelming debt that you have no way of repaying.

If your unsecured debts outweigh your income or any assets you may have, then you are deemed insolvent and bankruptcy could be the solution.

Bankruptcy should not be entered into lightly or without first seeking the appropriate advice.

Bankruptcy usually lasts for one year and your unsecured debts will be written off after this time.

Changes to Bankruptcy fees and process from 6th April 2016
From 6th April 2016, the total fee for bankruptcy is £655 (a £130 application fee, plus a £525 deposit paid to the official receiver).

UPDATE 01/07/2016. From 1st July 2016, the total fee for bankruptcy increased to £680 (a £130 application fee, plus a £550 Official Receivers fee.

In Northern Ireland, the total cost is £647.00 which is made up of a  Court Fee of £115, a deposit of £525 and there is a Solicitors fee of £7

Instead of applying through the courts, an application is made online via the Governments central website www.gov.uk/.

The online application will be assessed by an adjudicator from the insolvency service- If accepted then your creditors have no choice but to accept this. Creditors and other companies included in the bankruptcy cannot continue to pursue you for the debts or take further action during this time.

There are also serious implications which should be taken into account when considering this solution. Any valuable asset that is not essential to your quality of living or job could be considered for sale to repay some of your debt, this includes your house and your vehicle.

Bankruptcy could have repercussions with your employment and any hire purchase (HP) agreements you may have, possibly resulting in termination of contract.

If you own a business, any assets belonging to the business may be sold to repay your debt. You could lose your professional status. You can continue work if self-employed but may struggle to maintain the business if it relies on credit or using credit of £500 or more.

If you have any spare income after general household expense, you may be expected to make regular contributions. Whilst bankrupt the majority of banks will not allow you to open anything other than a basic bank account. You will need to declare your bankruptcy status if you are trying to obtain credit in excess of £250.

There will be various restrictions which need to be abided by whilst under bankruptcy.

A creditor can petition for your bankruptcy.

Bankruptcy will have a serious impact on your credit rating and although bankruptcy is normally discharged after a year it will be evident on your credit file 6 years.

For further information:

Insolvency Service

Enquiry line  0300 678 0015
Email insolvency.enquiryline@insolvency.gsi.gov.uk

Citizens Advice Bureau


National Debtline