Bankruptcy is a form of insolvency and is normally only suitable if you can’t pay back your debts in a reasonable time. Assets you own, such as your house or car will usually be sold to pay off your debts. This means if your assets are worth more than your debts, or if all of your regular payments are up to date and you can afford to keep paying them, bankruptcy is unlikely to be the best option for you.
After you’ve been declared bankrupt, your creditors will write off your unsecured debts. This allows you to make a fresh start. Bankruptcy usually lasts for 12 months and you’ll have many financial restrictions during this period. When your bankruptcy ends, you’ll be ‘discharged’ from it.
If you go bankrupt you may find it difficult to take out any further credit, as bankruptcy will remain on your credit file for six years.
You apply for bankruptcy by submitting an application to the Insolvency Service in England and Wales, the Accountant in Bankruptcy in Scotland or the High Court in Northern Ireland.
If you apply for your own bankruptcy, you'll need to pay £680 to cover:
an adjudicator fee of £130
a deposit of £550 - you'll only get this back if your application is rejected
You can pay in instalments, but you'll need to pay the whole amount before you submit your bankruptcy application.