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What is Bankruptcy?

Bankruptcy is a formal insolvency solution that means your outstanding debts are written off. It is available to people living in England, Wales and Northern Ireland. The equivalent for people living in Scotland is called Sequestration.

Bankruptcy is typically viewed as a last resort. It’s a legally binding solution and is intended for those who can’t repay their debts using income or assets in a reasonable period of time.

Is Bankruptcy the right option for me?

Declaring bankruptcy will involve the selling of any assets (including your home, cars, caravans, etc.), and abiding by certain restrictions during and after the application. Your details will also appear on a public Insolvency Register.

How do I declare Bankruptcy?

To declare bankruptcy, you will need to apply through the Insolvency Register in England and Wales, or through the High Court in Northern Ireland. Applying for bankruptcy will require an initial fee of £680. You can pay this in instalments, but you’ll need to have paid the full amount before you submit your application.

A decision on your application for bankruptcy will return within 28 days. Once declared bankrupt, all assets of high value will be sold off. These include your home, cars and all assets which will go towards paying back your outstanding debts. If you have spare income after covering reasonable living costs, you may also be asked to pay a monthly amount under an Income Payment Agreement (IPA).

How long does Bankruptcy last?

The Bankruptcy process usually lasts around a year, after which any remaining debts will be written off.  

Bankruptcy Pros and Cons

Bankruptcy Pros

  • Wipes away all unsecured debts, allowing you to start over
  • Stops creditors from taking legal action
  • You will be left with enough money after repayments to live on

Bankruptcy Cons

  • Your possessions, such as your car and house, may be repossessed
  • There is an initial fee to pay
  • Your bankruptcy will be placed on a public record in the Bankruptcy Insolvency Register
  • Your credit rating will be negatively impacted for 6 years

Applying for Bankruptcy

  1. Before applying for bankruptcy, it’s important to seek financial advice from a regulated debt advisor. MoneyPlus Advice can review your debts and financial situation and advise on the best debt solution for you.
  2. Should that be Bankruptcy, you will need to declare yourself bankrupt at the gov.uk site, outlining your current debts, creditors, and financial situation. After 28 days, if your application is successful, you’ll be declared bankrupt.
  3. If your income is deemed substantial enough, you’ll be asked to pay a monthly amount towards your debts, in the form of an Income Payment Agreement (IPA) Once your bankruptcy term is complete (usually a year) your debts will be officially written off.

Am I eligible for Bankruptcy?

There are set requirements to be considered for bankruptcy. These include:

  • Being a resident of England, Wales, or Northern Ireland
  • Having no reasonable way to repay your debts through other methods
  • Be able to pay an initial fee of £680 (this can be paid in instalments)
  • No possibility of being able to repay your debts in the future
  • No spare income that could be used in another debt solution such as an Individual Voluntary Arrangement (IVA)

What debts can’t be included in Bankruptcy?

Though bankruptcy typically includes most unsecured debts, there are some exceptions that will not be written off when you are declared bankrupt, such as:

  • Student loans
  • Social fund loan
  • Debts taken out fraudulently
  • TV license arrears
  • Magistrate court fines
  • Debts taken out after you declared bankruptcy
  • Child maintenance arrears

Living with Bankruptcy

Following your initial filing for bankruptcy, your personal situation will change significantly when you receive a bankruptcy order. An official receiver will take control of your possessions and any that are considered valuable assets may be repossessed.

If you have spare income each month (after covering reasonable living costs), you will likely be asked to make monthly repayments towards your debts based on what you can afford.

As your credit score will be negatively affected, getting future loans, mortgages or tenancies may become more difficult. Bankruptcy will remain on your credit file for 6 years, after which you can begin rebuilding your score.

Bankruptcy typically lasts for a year, Once you reach the end of your bankruptcy agreement your debts are written off, allowing you to make a fresh start.

“It’s taken so much stress away… they’ve really given me my life back. “

— Karen, Gloucestershire
Read Karen’s story…

How Bankruptcy affects mortgages & renting


If you own a home with a mortgage solely in your name, the receiver will likely want to sell the house to recoup the entire equity. However, if the home is jointly owned, they will only take your share.

If you wish to keep your home, a family member or friend may be able to pay the equivalent equity to the receiver.

If your home has little or no equity value (below £1000) your home probably will not be repossessed. Instead, the value of the home will be reviewed to redetermine the property’s equity value.

If the property still holds no equity value at the end of 3 years, you will possibly be able to keep it. If it is determined your home now possesses equity value, you will likely be asked to sell. If it’s decided you need to sell your home, you will be given around a year to find somewhere else to live.


As long as your payments to your landlord are up to date, you should be able to remain in your current tenancy during your bankruptcy. 

If you currently have outstanding rent arrears, these will be included in your bankruptcy. Although a landlord can’t take legal action against you, they are permitted to evict you. 

Note that some tenancy agreements have a clause relating to bankruptcy that terminates your tenancy if you go bankrupt. If this applies to your agreement, this is something to think about before you apply for bankruptcy.

Also be aware that because of the negative impact bankruptcy will have on your credit score, it might be difficult to find future tenancies. Private landlords might also check the Insolvency Register, and this might put them off accepting a private rental application. However, in some cases this can be addressed if you provide a guarantor or a larger deposit.

I really cannot speak too highly of MoneyPlus, they literally saved my life.

— Stuart, Norfolk
Read Stuart’s story…

Will filing for Bankruptcy stop bailiffs?

Once you have been delcared bankrupt, you’re granted legal protection and your creditors can’t contact you directly. Because of this, any use of bailiffs or other attempts to recover money you owe must cease while you are under your bankruptcy agreement.

What restrictions will I have during Bankruptcy?

During bankruptcy there a number of restrictions placed upon you that you must adhere to, these include:

  • Borrowing over £500 without disclosing your current bankrupt status
  • Being excluded from certain jobs, such as Insolvency Practitioner, Consumer Credit license holder, Charity Trustee
  • Being a company director or running a company without a court permission
  • Rebranding if you are self-employed or without disclosing your bankruptcy to the people you do business with
  • Buying a house under a right-to-buy scheme

Are you seeking Bankruptcy and wish to know more?

That’s where our advisors come in, our expert advice team can help you find the debt solution that works for you. If you feel you may qualify for Bankruptcy, give us a call and we will help you work it out.

At MoneyPlus we understand that every financial situation is different, and approach every customer with the care and individuality that they deserve.

So, get in touch today and start living better with MoneyPlus Advice.

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A debt consolidation loan involves taking out a new loan in order to repay your existing debts. You then pay off this new loan in one monthly sum, rather than paying out to multiple creditors.

Still unsure or want to know more?

Still not sure if bankruptcy is the right option for you? Or maybe you want to know more about our bankruptcy service. Our friendly and knowledgeable advisors are here to give you the debt advice and information you need. If you have a problem managing your debt, we’re here for you.

Get in touch with us today to find out more about bankruptcy help and to start living better.