What is a Bankruptcy?

Bankruptcy is a formal, court-based insolvency proceeding for those who are unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. The Insolvency Service states that choosing bankruptcy as a debt solution should always be a last resort. Bankruptcy is available in the UK apart from in Scotland. ‘Sequestration’ is a similar option for those in Scotland, however its criteria, benefits and considerations are not exactly the same and so should be considered independently.


  • Your bankruptcy can be discharged after 12 months.
  • Once your bankruptcy is discharged, all included debts will be written off.
  • All interest and charges will be frozen.
  • Bankruptcy will prevent your creditors from taking or continuing with any legal action.
  • You can pay the fee online in instalments, but your application will not begin until the fee has been paid in full.

Important Considerations:

  • If you can afford to make a payment, you will be asked to do so for up to three years.
  • Bankruptcy costs £680 per person.
  • Once you are declared bankrupt, you are no longer in control of your assets.
  • From the date the bankruptcy order is actioned, your credit rating and your ability to obtain credit will be negatively affected. Bankruptcy remains on your credit file for at least six years.
  • Details of your bankruptcy will be added to the publicly searchable Insolvency Register.
  • Any valuable assets – such as a house, motor vehicle or jewellery, may be sold to help pay towards your bankruptcy debts.