How much does it cost to go bankrupt?

The application fee is £680 (paid online to the Insolvency Service). This covers the cost of processing your application. If you cannot afford this upfront, some charities can help with the fee, or you may be able to save towards it.

What happens to your house if you go bankrupt?

If you own a home with equity, the trustee may seek to sell it or realise the equity. If there is no equity, your home may not be at risk. The trustee has 3 years from the date of bankruptcy to deal with your property interest. If they take no action in 3 years, the interest in the property reverts to you.

How long does bankruptcy last?

Bankruptcy typically lasts 12 months, after which you are discharged. However, it stays on your credit file for 6 years from the date of the bankruptcy order. An Income Payments Agreement or Order can last for 3 years.

Bankruptcy Guide UK — What You Need to Know Before, During, and After | PocketWise

Bankruptcy is a formal legal process that writes off most of your debts when you cannot pay them. While it provides a fresh start, it has serious and lasting consequences for your finances, credit, career, and assets.

When Bankruptcy May Be Appropriate

Your unsecured debts are significantly more than you can repay
Other solutions (debt management plans, IVAs) are not suitable
You have few valuable assets
You need a faster route to a fresh start
You are being pursued by creditors and need legal protection

The Bankruptcy Process

Step	What Happens	Timeline
1. Application	Apply online to the Insolvency Service (£680 fee)	Day 1
2. Adjudicator review	Application assessed	Up to 28 days
3. Bankruptcy order	Made if application is approved	—
4. Official Receiver	Interviews you about your finances	Within weeks
5. Trustee appointed	Manages your bankruptcy (OR or insolvency practitioner)	—
6. Asset realisation	Trustee deals with your assets	During bankruptcy
7. Discharge	Bankruptcy ends (most restrictions lifted)	Usually 12 months

What Happens to Your Assets

Asset	What Happens
Home (with equity)	Trustee may sell or force sale; you may be given time to buy out their interest
Home (no equity)	Usually not at risk, but trustee has 3 years to act
Car	May be kept if needed for work/essential use (low value)
Household goods	Normally kept (essential items exempted)
Savings	Handed to trustee
Pension	Generally protected (not part of bankruptcy)
Investments	Handed to trustee
Tools of trade	May be kept if needed for employment

What Debts Are Written Off?

Written Off	NOT Written Off
Credit cards	Student loans
Personal loans	Court fines
Overdrafts	Child maintenance
Store cards	Debts from fraud
Catalogue debts	Some tax debts
Some HMRC debts	Secured debts (mortgages)
Utility arrears	Debts incurred during bankruptcy

Income Payments

If you have surplus income after essential living costs, you may be required to make an Income Payments Agreement (IPA) or Income Payments Order (IPO):

Feature	Detail
Duration	Up to 3 years (extends beyond the 12-month bankruptcy period)
Amount	Based on your disposable income
Typical payment	£50–£300/month
Enforcement	Legally binding

Restrictions During Bankruptcy

Restriction	Detail
Borrowing	Cannot borrow over £500 without disclosing bankruptcy
Business	Cannot act as a company director
Bank account	May be frozen; will need a basic account
Employment	Some professions barred (solicitor, accountant, police, military)
Travel	Must inform trustee; may need permission for extended travel
Public office	Cannot be an MP, councillor, or magistrate
Assets	Cannot dispose of assets without trustee permission

Consequences Timeline

Event	Duration
Bankruptcy period	12 months
Income payments (if applicable)	Up to 3 years
Credit file record	6 years
Insolvency Register entry	3 months after discharge
Difficulty getting credit	6+ years
Difficulty getting a mortgage	6+ years (specialist lenders may consider earlier)

Costs

Cost	Amount
Application fee	£680
Legal advice (optional)	Free from debt charities

After Bankruptcy: Rebuilding

Year 1 (During Bankruptcy)

Open a basic bank account (no overdraft)
Budget carefully — see our budget planner guide
Build an emergency fund as soon as possible (small amounts)

Years 1–3

Consider a credit builder card after discharge
Make small purchases and pay in full each month
Register on the electoral roll at your current address
Maintain stable employment and address

Years 3–6

Your credit score will gradually improve
Some lenders may consider you for credit (at higher rates)
Continue responsible credit use
After 6 years, bankruptcy drops off your credit file

Alternatives to Bankruptcy

Alternative	Best For	Duration
IVA	Debts of £6,000+ with regular income	5–6 years
DMP	If you can repay in full at lower payments	Varies
Debt Relief Order (DRO)	Debts under £30,000, low income, few assets	12 months
Debt consolidation	If you can get a better interest rate	Varies
Negotiate with creditors	Direct negotiation for reduced payments	Varies

Getting Free Help

Organisation	Contact	Service
StepChange	0800 138 1111	Free debt advice and solutions
National Debtline	0808 808 4000	Free debt advice
Citizens Advice	citizensadvice.org.uk	Free advice on all debt options
MoneyHelper	0800 138 7777	Government-backed advice

Never pay for bankruptcy advice — free, comprehensive help is available from the organisations above.