You may be able to apply for bankruptcy if you cannot afford to repay your debts and the total amount you owe is greater than the value of your assets (the things you own).
Bankruptcy is a formal legal process that usually lasts 12 months. During this time, most of your creditors cannot contact you, take legal action, or chase you for payment. Once you are discharged from bankruptcy, most of your remaining debts will be written off.
The current bankruptcy application fee is £680, which must be paid in full before you can submit your application. You can pay this amount in instalments if needed.
If you are unable to afford the fee, you may be able to get financial support through a grant or charitable fund — for example, by searching for help on the Turn2us website.
If you have spare income after covering essential living costs, you may be required to make regular payments towards your debts for up to three years under an Income Payments Agreement (IPA) or Income Payments Order (IPO).
Advantage Of A Bankruptcy
- Most debts are written off after 12 months.
- Stops creditor contact and legal action once you're made bankrupt.
- You won’t usually have to make monthly payments unless you can afford to.
- You’re protected from bailiffs and further court enforcement.
- The process is straightforward and done online.
- Offers a clean financial start if other solutions aren’t suitable.
- Creditors must deal with the Official Receiver, not you.
Disadvantages Of A Bankruptcy
- Your credit file will be affected for six years.
- Some debts like student loans, court fines, and child maintenance are not included.
- Your name appears on the public Insolvency Register and in The Gazette.
- You may have to sell valuable assets, including your home or car.
- If you have surplus income, you may need to make payments for up to 3 years.
- You can't act as a company director or manage a business during bankruptcy.
- It may affect your job or professional membership in certain industries.
- Bankruptcy applications cost £680 and must be paid before submission.