Debts Enter the Process
Many debts that exist when the bankruptcy order is made can be dealt with through the bankruptcy. However, some types of debt are treated differently and may remain payable.
Bankruptcy Help & Support
Bankruptcy Help & Support in England & Wales
Understand what bankruptcy could mean for your debts, income, assets and financial future before making a decision.
Bankruptcy is a formal insolvency process that can have significant financial and practical consequences. If debt has become unmanageable, understanding how bankruptcy works, what may happen to your assets and which other debt options may be relevant can help you build a clearer picture of the choices available.
Debts •
Assets •
Income •
Your Home •
Discharge
01
Understand
Learn what bankruptcy means and how the process works.
02
Review
Consider debts, income, assets and your wider circumstances.
03
Consider
Understand bankruptcy alongside other potentially relevant debt options.
04
Connect
Access appropriately authorised professional support where required.
Understanding Bankruptcy
What Is Bankruptcy?
Bankruptcy is a formal personal insolvency process in England and Wales for individuals who cannot pay their debts. It can provide a route towards being released from many debts, but it also places your finances and certain assets under a formal insolvency process and carries important consequences that should be understood beforehand.
The Short Answer
Bankruptcy Deals With an Individual's Debts Through a Formal Legal Process
When a bankruptcy order is made, the bankruptcy is normally dealt with initially by the Official Receiver. The Official Receiver may also act as trustee unless an insolvency practitioner is appointed to take over that role.
The trustee deals with assets that form part of the bankruptcy estate and, where funds are available, money realised from those assets can ultimately be distributed in accordance with the bankruptcy process.
Assets Are Reviewed
Assets forming part of the bankruptcy can come under the control of the trustee and may be realised for creditors. Certain belongings and other assets can be exempt or subject to specific rules.
Income May Be Considered
Your income and reasonable living expenses can be reviewed. Depending on your circumstances, surplus income may lead to an Income Payments Agreement or Income Payments Order.
Discharge Can Follow
Bankruptcy normally ends through discharge. Discharge is usually automatic after 12 months, although some obligations, assets, payments or debts can continue beyond that point.
Who Manages the Process?
The Official Receiver & Trustee
01
Financial Information
You must provide information about your finances, debts and assets and cooperate with the bankruptcy process.
02
Assets & Creditors
The trustee deals with assets that form part of the bankruptcy and the claims of creditors.
03
Ongoing Cooperation
There are responsibilities and restrictions during bankruptcy, and cooperation with the Official Receiver or trustee is required.
Bankruptcy Is Not the Only Debt Option
Understand the wider position before deciding whether bankruptcy is appropriate.
Other debt solutions may be available depending on your debts, assets, income and wider circumstances. Bankruptcy can have significant consequences, so the different options should be considered before an application is made. Where regulated debt advice is required, this should be provided by an appropriately authorised debt advice provider.
The Bankruptcy Process
What Happens When You Go Bankrupt?
If you apply for your own bankruptcy in England and Wales, the process begins with an online application. If a bankruptcy order is made, your case is passed to the Official Receiver and your debts, assets, income and financial circumstances are considered as part of the formal bankruptcy process.
Applying for Your Own Bankruptcy
Applications are made online through the GOV.UK bankruptcy service.
You provide information about your debts, income, outgoings and financial circumstances. The application cannot be submitted until the application fee has been paid in full, although the fee can be paid in instalments before submission.
£680
Current fee to submit your own bankruptcy
application
28 Days
A decision is usually received within this
period, although it can take longer
Prepare the Application
Details of your debts, income, spending, assets and wider financial circumstances are gathered for the online application.
Submit & Pay the Fee
The online application is submitted once the full bankruptcy application fee has been paid.
Adjudicator Review
An Insolvency Service adjudicator considers whether the requirements for making a bankruptcy order are met.
Bankruptcy Order
If the application is accepted, a bankruptcy order is made and the formal bankruptcy begins.
Official Receiver
Your case passes to the Official Receiver. Financial information, debts and assets are reviewed and further information may be needed.
Discharge
Discharge is usually automatic after 12 months, although some assets, payments, obligations or debts can continue beyond discharge.
Once the Order Is Made
What Changes?
A bankruptcy order creates practical and legal consequences. The precise effect depends on your financial circumstances, assets, income and the debts involved.
Assets Are Considered
The trustee considers which assets form part of the bankruptcy estate and how they should be dealt with. Specific exemptions and rules can apply.
Income Is Reviewed
Your income and reasonable household expenses are considered. Surplus income may result in an Income Payments Agreement or Order.
Restrictions Apply
Bankruptcy creates restrictions while you remain bankrupt, including rules relating to obtaining credit, running a business and acting as a company director.
Bankruptcy Becomes Public
Bankruptcy information is normally recorded on public insolvency records, including the Individual Insolvency Register, and the bankruptcy order is published in The Gazette.
Discharge does not necessarily mean every part of the bankruptcy immediately ends.
Discharge is usually automatic after 12 months, but a trustee may continue dealing with assets that form part of the bankruptcy estate. Income Payments Agreements or Orders can also continue after discharge, and some types of debt are not released by bankruptcy.
Debts & Bankruptcy
What Happens to Your Debts in Bankruptcy?
Bankruptcy can ultimately release you from many debts that existed when the bankruptcy began, but it does not simply make every financial obligation disappear. Some debts are treated differently, secured lending has its own considerations, and new liabilities arising after bankruptcy remain your responsibility.
The Short Answer
Most Bankruptcy Debts Can Be Released on Discharge — But There Are Important Exceptions
The effect of bankruptcy depends on the type of liability involved and when it arose. Many unsecured debts existing at the start of the bankruptcy can be dealt with through the bankruptcy process and will no longer be personally payable following discharge. However, certain liabilities are not released in the same way.
Debts That Can Commonly Be Dealt With
Many ordinary unsecured liabilities that exist when bankruptcy begins can form part of the bankruptcy process.
Credit Cards & Unsecured Borrowing
Credit-card balances, unsecured personal loans and similar borrowing can commonly form part of a bankruptcy.
Bank Overdrafts
Money owed on an overdrawn bank account at the relevant time can generally be dealt with within the bankruptcy.
Certain Existing Household Liabilities
Some unpaid bills and other liabilities already outstanding at the date of bankruptcy may be included, depending on the nature and timing of the debt.
Other Unsecured Debts
Other unsecured creditor balances may also be capable of being dealt with through bankruptcy, subject to the legal treatment of the particular liability.
Debts That Can Remain Payable
Bankruptcy does not release every type of liability. Some debts require separate treatment and can remain payable after discharge.
Student Loans
Student-loan liabilities are not released through bankruptcy in the same way as ordinary unsecured borrowing.
Debts Arising From Fraud
Liabilities arising from fraud are not released simply because the person has been discharged from bankruptcy.
Certain Family Proceedings Debts
Liabilities such as child maintenance and some other sums arising from family proceedings may remain payable unless a court decides otherwise.
Certain Personal-Injury Damages
Liability for damages relating to personal injury can also survive bankruptcy unless the court orders otherwise.
Secured Borrowing
What About Your Mortgage or Secured Loan?
01
Security Still Matters
Bankruptcy does not simply remove a creditor's security over an asset such as a property.
02
Payments May Need to Continue
GOV.UK states that secured debts such as a mortgage must continue to be paid if you continue living in the mortgaged property.
03
Property Requires Separate Review
Your home, equity and the trustee's interest in property require separate consideration. We cover this in the next section.
Debts After Bankruptcy
Bankruptcy does not cover new debts you take on afterwards.
Ongoing living costs and liabilities arising after the bankruptcy order remain your responsibility. For example, ongoing rent, utilities and other new financial commitments still need to be dealt with as they arise. Whether a particular liability is included in bankruptcy can depend on its nature and timing, so individual debts should be checked where there is uncertainty.
Assets & Bankruptcy
What Happens to Your Home, Car, Savings & Assets?
Bankruptcy does not automatically mean losing everything you own. The trustee considers which assets form part of the bankruptcy estate, their value and whether particular items are protected or reasonably required for everyday life or work.
The Core Principle
Assets Are Reviewed Individually — Different Assets Have Different Rules
When a bankruptcy order is made, the trustee identifies assets that belong to you and determines how they should be dealt with. Valuable assets forming part of the bankruptcy estate may be realised to meet the costs of the bankruptcy and make payments towards creditors, while important exemptions and protections can apply.
Property & Equity
If you own a home, your interest in the property and the equity available after secured borrowing are important. The trustee may need to deal with that interest, but bankruptcy does not mean every home is automatically sold.
Cars & Transport
A vehicle can usually be kept where other transport is not practical and it is reasonably required for work, basic household needs or caring responsibilities. Value and any finance agreement can materially affect the position.
Money & Investments
Cash, savings and investments can form part of the bankruptcy estate. Bank accounts are also affected when bankruptcy begins, so available money and account arrangements need to be considered.
Essential Household Items
Essential household possessions such as clothing, bedding and furniture can usually be kept. If an otherwise protected item has significant value, the trustee may consider whether a reasonable lower-value replacement is appropriate.
Tools Needed for Your Job
Items reasonably required personally for your employment, business or vocation can be exempt from the bankruptcy estate. Excessively valuable items can require separate consideration.
Pension Funds
Money already held within most qualifying UK pension schemes is normally outside the bankruptcy estate. Pension income or payments actually received can require separate consideration when income is assessed.
One of the Biggest Questions
Will I Lose My House If I Go Bankrupt?
Not automatically — but your interest in the property must be considered.
If you own your family home, the trustee considers the equity available after secured debts such as a mortgage. Where your interest has sufficient value, the trustee may need to realise that value for the bankruptcy estate. The outcome depends on the ownership, equity and individual circumstances.
01
Establish Ownership
Is the property solely owned or jointly owned with another person?
02
Establish the Equity
The property's value is considered alongside mortgages and other secured borrowing.
03
Trustee Reviews the Interest
If your equity exceeds £1,000, GOV.UK says the trustee can sell the property or apply for a charging order.
04
Other Outcomes Can Exist
In some circumstances another person may be able to purchase the bankrupt person's interest. If the family home is not dealt with within three years, it will usually transfer back.
If You Rent Your Home
Bankruptcy does not automatically mean that a tenant has to leave their home.
GOV.UK states that a landlord may be told about the bankruptcy, but it is unlikely that a tenant will be asked to leave simply because they are bankrupt where the rent is up to date. The tenancy agreement and individual circumstances should still be checked.
Income During Bankruptcy
What Happens to Your Income & Earnings?
Bankruptcy does not mean that all of your wages are taken. Your trustee considers your income alongside the reasonable living costs of you and your household. Where money remains after those needs are met, you may be asked to contribute some or all of that surplus to the bankruptcy estate.
The Short Answer
You Keep Enough Income to Meet Reasonable Domestic Needs
The trustee reviews the household's financial position and decides what expenditure is reasonably required. If your income exceeds those reasonable needs, the remaining surplus may be available for an Income Payments Agreement or, where agreement cannot be reached, an Income Payments Order.
+
Step 01
Household Income
Wages and other relevant sources of income are identified.
−
Step 02
Reasonable Living Costs
Necessary household and family expenditure is taken into account.
=
Step 03
Available Surplus
The assessment identifies whether disposable income remains after reasonable needs.
→
Step 04
Trustee Review
The trustee considers whether a contribution from surplus income is appropriate.
£
Potential Outcome
IPA or IPO
Where sufficient surplus income exists, regular contributions may be agreed or ordered.
Reasonable Domestic Needs
What Living Costs Can Be Considered?
The assessment is not simply based on your salary. The trustee considers the reasonable costs of maintaining you and your household. The examples shown here are not an exhaustive list.
Housing
Reasonable rent or mortgage and associated housing costs.
Household Bills
Utilities, household insurance, telephone and other reasonable bills.
Food & Clothing
Reasonable food, clothing and ordinary household requirements.
Transport
Reasonable vehicle or other transport costs where appropriate.
Health Costs
Relevant prescriptions, dental treatment, optical and similar reasonable costs.
Work-Related Costs
Certain reasonable costs required for employment or professional activity.
What Is an IPA?
An Income Payments Agreement is a binding agreement between you and the trustee under which an agreed amount of post-bankruptcy income is paid into the bankruptcy estate. It is used where the assessment shows that sufficient surplus income is available.
36
An IPA can last for a maximum of 3 years
(36 months).
What Is an IPO?
If an Income Payments Agreement cannot be agreed, the trustee can apply to the court for an Income Payments Order. The court cannot make an order that would reduce your income below what is necessary to meet the reasonable domestic needs of you and your family.
⚖
An IPO is a court order rather than a
voluntary agreement.
If your main or only income is from state benefits, GOV.UK says the trustee will not normally ask you to enter an Income Payments Agreement.
You must tell the trustee if your income or spending changes. Existing payments can be reviewed and may be increased, reduced or suspended depending on the circumstances.
If you receive a lump sum while an IPA or IPO is operating, the trustee may consider whether a one-off contribution should be made.
Bankruptcy Discharge & Income Payments
Income payments can continue after you are discharged from bankruptcy.
Discharge is usually automatic after 12 months, but an IPA or IPO already put in place can continue until its agreed or ordered term ends. This is why the length of the bankruptcy itself should not be confused with the length of an income payments arrangement.
Life During & After Bankruptcy
How Does Bankruptcy Affect Your Credit, Work & Everyday Life?
Bankruptcy creates temporary legal restrictions and longer-lasting financial consequences, but it does not prevent someone from working or participating in ordinary life. Understanding the specific restrictions is more useful than assuming bankruptcy stops everything.
The Practical Position
Some Restrictions End at Discharge — Other Effects Last Longer
The ordinary bankruptcy restrictions generally apply while you remain an undischarged bankrupt. Discharge is usually automatic after 12 months. However, bankruptcy can continue to affect your credit record and certain public records after discharge, while assets or income arrangements already within the bankruptcy can also continue to be dealt with.
Borrowing Money
While bankrupt, if you borrow or obtain credit of £500 or more — whether alone or jointly — you must tell the credit provider that you are bankrupt. Bankruptcy can also make obtaining credit more difficult even after discharge.
Acting as a Director
An undischarged bankrupt cannot act as a company director or directly or indirectly take part in the promotion, formation or management of a limited company without the court's permission.
Running a Business
Bankruptcy does not automatically prevent self-employment. However, if you trade under a different business name while undischarged, disclosure rules apply and the people you do business with must be told the name under which you were made bankrupt.
Your Job
Bankruptcy does not create a general ban on employment. However, particular professions, regulated roles, contracts or offices can have their own rules, so anyone concerned about a specific occupation should check the relevant professional or regulatory requirements.
Insolvency Register
Bankruptcy details appear on the Individual Insolvency Register. The record is normally removed within three months after discharge, although other records of the bankruptcy can remain for longer.
Restrictions Usually End
The ordinary restrictions normally end when you are discharged. This does not automatically remove the bankruptcy from your credit file or end an existing IPA, IPO or the trustee's administration of bankruptcy assets.
While You Are Bankrupt
£500+
The important disclosure threshold when
obtaining credit while undischarged.
01
Credit of £500 or More
If you obtain £500 or more of credit while bankrupt, you must disclose that you are bankrupt to the credit provider.
02
Joint Borrowing Counts
The disclosure requirement also applies where the credit is obtained jointly with another person.
03
Do Not Hide the Bankruptcy
Failing to make the required disclosure can be a criminal offence, so the restriction should be taken seriously.
Public & Credit Records
How Long Does Bankruptcy Stay on Record?
Different records operate on different timescales. Discharge therefore does not mean that every record of the bankruptcy disappears at the same time.
01
Bankruptcy Order
The bankruptcy begins and the ordinary bankruptcy restrictions apply.
12m
Usual Discharge
Discharge is normally automatic after 12 months.
+3m
Insolvency Register
The bankruptcy entry is normally removed from the Individual Insolvency Register within three months of discharge.
6yr
Credit Reference File
Bankruptcy can remain on the credit file for six years from the date of the bankruptcy order.
Bankruptcy Restrictions Can Sometimes Last Longer
Discharge does not always end the restrictions in every case.
Where the Official Receiver considers that conduct connected with the bankruptcy warrants further restrictions, a Bankruptcy Restrictions Order or Bankruptcy Restrictions Undertaking can extend restrictions beyond discharge. These extended restrictions can last between 2 and 15 years depending on the circumstances.
LetterChekr™
Received a Statutory Demand, Bankruptcy or Creditor Letter?
Formal debt correspondence can contain important deadlines, legal terminology and potential next steps. Upload the document to LetterChekr™ and receive an automated, plain-English explanation of what the document appears to be and the key information identified within it.
Understand the Correspondence
Know What You Have Received Before Deciding What to Do Next
Creditor correspondence can range from routine collection letters to documents connected with formal insolvency action. LetterChekr™ helps identify the document, sender, amounts, references and deadlines visible within the correspondence and presents the information in clearer language.
01
Statutory Demands
Upload a statutory demand to help identify the creditor, amount, references and important dates shown in the document.
02
Bankruptcy & Insolvency Correspondence
Use LetterChekr™ to help understand correspondence that appears to relate to bankruptcy or formal insolvency action.
03
Solicitor & Creditor Letters
Upload letters from creditors, collection businesses, solicitors or other organisations pursuing payment.
04
Documents You Do Not Understand
If you are unsure what a debt document is, LetterChekr™ can help explain what it appears to say in plain English.
Do not assume an unfamiliar document can safely be ignored.
Some debt and insolvency documents can involve important response periods. LetterChekr™ can help explain the correspondence, but it does not replace legal advice or determine whether formal action is valid.
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The Bankruptcy Journey
What Does the Bankruptcy Process Look Like?
For someone applying for their own bankruptcy in England and Wales, the process moves through a number of defined stages. Understanding what happens before, during and after a bankruptcy order can make the process easier to understand and help identify the questions that need answering before an application is made.
Before Bankruptcy
Financial Difficulty
Debt has become difficult or impossible to manage and the position needs to be understood. This may involve missed payments, creditor pressure, court action or simply insufficient income to meet existing commitments.
02
Stage 02
Understand the Available Options
Before applying for bankruptcy, the wider financial position should be considered. Other debt options may be available depending on the debts, income, assets, home and individual circumstances.
Bankruptcy is not the only debt optionPrepare & Submit the Application
An individual applying for their own bankruptcy in England and Wales uses the online bankruptcy service. Information is required about debts, income, spending and financial circumstances.
The application is submitted online
04
Stage 04
Adjudicator Review
The adjudicator considers the application and whether the requirements for bankruptcy are met. Additional information may be requested before a decision is made.
A decision is usually received within 28 daysBankruptcy Order
If the application is accepted, a bankruptcy order is made. Formal bankruptcy begins and the case is passed to the Official Receiver.
Formal bankruptcy begins
06
Stage 06
Official Receiver Review
The Official Receiver reviews information about debts, finances and valuable assets. Further information may be requested and an interview can take place where required.
Contact is usually made within 2 weeksAssets & Income Are Considered
The trustee considers which assets form part of the bankruptcy estate and whether there is surplus income available after reasonable living expenses. The treatment of a home, vehicle, savings and other property depends on the applicable rules and circumstances.
08
Stage 08
The Bankruptcy Period
During bankruptcy, the individual must cooperate with the Official Receiver or trustee, provide information when required and comply with the bankruptcy restrictions. Changes to income or possessions must also be reported.
Restrictions normally apply until dischargeDischarge
Discharge is usually automatic 12 months after the bankruptcy order. It normally releases the individual from the ordinary bankruptcy restrictions and from many bankruptcy debts, subject to the exceptions that apply.
Usually 12 months after the bankruptcy order
After Discharge
An Important Final Stage
Discharge Does Not Necessarily End Everything
The legal status of being bankrupt normally ends at discharge, but certain matters already arising from the bankruptcy can continue afterwards.
01
Bankruptcy Assets
Assets that already form part of the bankruptcy estate can remain under the trustee's control after discharge while they are dealt with.
02
Income Payments
An existing Income Payments Agreement or Income Payments Order can continue after discharge until the agreed or ordered payment period ends.
03
Excluded Debts
Debts that are not released by bankruptcy remain payable after discharge in accordance with the rules applying to those liabilities.
This journey describes an individual's own bankruptcy application.
A creditor can also petition the court to make an individual bankrupt in qualifying circumstances. That follows a different route before the bankruptcy order is made. This timeline therefore focuses on the process for an individual applying for their own bankruptcy in England and Wales and should not be treated as personalised legal or financial advice.
Bankruptcy Support
Understand the Position Before Making a Decision.
Bankruptcy can affect your debts, income, assets, home and financial future. Before making a significant decision, it can help to understand the complete financial position and the different routes that may be available.
01
Clarity.
02
Time.
03
Choice.
04
Control.
Important information: Stop Your Debt UK provides information, practical support, administration and case coordination. Stop Your Debt UK is not an FCA-authorised debt advice firm or an SRA-regulated law firm. Where regulated debt advice, legal advice, formal insolvency services or another regulated or reserved activity is required, the relevant work is undertaken by an appropriately authorised third-party professional. Information on this website is general information and should not be treated as personalised legal or financial advice.