Bankruptcy in England and Wales costs £680 and lasts 1 year. Most unsecured debts are written off, but you may lose assets. About 12,000 people go bankrupt each year in the UK. Here’s the complete guide.
How UK Bankruptcy Works
- Apply online at gov.uk (£680 fee, payable in instalments)
- Adjudicator reviews your application (usually approved within days)
- Bankruptcy order made — debts are frozen, creditors can’t pursue you
- Official Receiver contacts you — reviews your finances, assets, and income
- Income Payment Agreement — if you have surplus income, pay for 3 years
- Discharged after 12 months — debts written off
What Happens to Your Assets
| Asset | What Happens |
|---|---|
| Home (owned) | May need to be sold or equity released |
| Car (essential) | Keep if low value and needed for work |
| Car (valuable) | May be sold |
| Pension | Generally protected |
| Household items | Keep reasonable household goods |
| Tools of trade | Keep up to £1,000 value |
| Bank accounts | May be frozen temporarily |
| Savings | Handed to Official Receiver |
Income Payment Orders
If your income exceeds your reasonable expenses, you’ll pay the surplus to the Official Receiver for 3 years:
| Monthly Surplus | Monthly Payment | Total Over 3 Years |
|---|---|---|
| £100 | £100 | £3,600 |
| £200 | £200 | £7,200 |
| £300 | £300 | £10,800 |
Debts NOT Cleared by Bankruptcy
| Debt Type | Still Owed? |
|---|---|
| Student loans | Yes |
| Court fines | Yes |
| Child maintenance | Yes |
| Magistrates’ court fines | Yes |
| Debts from fraud | Yes |
| Secured debts (mortgage) | Yes (unless property surrendered) |
Bankruptcy vs. IVA vs. DRO
| Factor | Bankruptcy | IVA | DRO |
|---|---|---|---|
| Cost | £680 | IP fees in payments | £90 |
| Duration | 1 year | 5–6 years | 1 year (moratorium) |
| Debt written off | Most | 50–75% | All (if under £30,000) |
| Assets at risk | Yes | Limited | Must have <£2,000 |
| Income limit | None | Must afford payments | <£50/month surplus |
| Credit impact | 6 years | 6 years | 6 years |
| Home at risk | Yes | Maybe (equity) | No (renters only) |
Credit Recovery After Bankruptcy
| Milestone | Timeline |
|---|---|
| Discharge | 12 months |
| Basic bank account | During bankruptcy |
| Prepaid cards | During bankruptcy |
| Secured credit card | After discharge |
| Unsecured credit card | 1–2 years post-discharge |
| Record removed from credit file | 6 years from order date |
| Mortgage (specialist lenders) | 3+ years post-discharge |
| Mortgage (mainstream) | 6+ years post-discharge |
Bottom Line
Bankruptcy is a fresh start that writes off most debts in just 1 year — but it comes with real consequences for homeowners and those with surplus income. If you have under £30,000 debt and limited assets, a Debt Relief Order (£90) may be better. If you can afford some repayment, an IVA preserves more control. Always get free advice from StepChange before deciding.
See our IVA guide or DMP guide for alternatives.
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