The Financial Conduct Authority’s rules on short-term credit apply across the UK, but formal insolvency is devolved, so a borrower in Northern Ireland uses different procedures from one in England and Wales or Scotland. This guide summarises the Northern Ireland options described by nidirect and the Department for the Economy’s Insolvency Service. It covers Northern Ireland only; the other nations are covered in separate guides on this site. It is general information, not legal or financial advice.
Start with alternatives to formal insolvency
nidirect stresses that a person does not need to become bankrupt because they are in debt, and that bankruptcy is serious because a person may have to give up things of value and their interest in their home. It lists the alternatives as informal agreements, in which the person writes to creditors to agree a repayment timetable, individual voluntary arrangements (IVAs), administration orders and debt relief orders. Related reading: debt management plans and IVAs versus debt management plans.
Bankruptcy in Northern Ireland
According to nidirect, bankruptcy is a legal status that usually lasts a year, during which non-essential assets and excess income are used to pay creditors, and at the end most debts are cancelled. The High Court makes a bankruptcy order after a petition is presented, and petitions can only be presented in the High Court in Belfast. A petition can come from one or more creditors, the debtor, or the supervisor of an IVA.
A debtor filing their own petition completes two forms: the debtor’s bankruptcy petition and a statement of affairs, sworn before an officer of the court or a solicitor. nidirect lists three fees: a deposit of £525 to administer the bankruptcy, a court fee of £189, and a solicitor’s fee of around £7. A creditor can petition where the person owes an unsecured debt of over £5,000, which may be the total of two or more debts.
What bankruptcy involves
An Official Receiver is appointed to protect the person’s assets and acts as trustee where there are none; if there are assets, an insolvency practitioner is appointed. Tools or vehicles needed for work and household items are not treated as assets. A homeowner might have to sell the property, depending on ownership, value and equity. The Official Receiver may ask for an income payments agreement, requiring fixed monthly payments from income for three years, and can apply for an income payments order if it is not signed.
nidirect says the bankrupt person must stop using credit cards and bank or building society accounts, must not obtain credit over £500 without telling the creditor of the bankruptcy, and must not pay creditors directly, with exceptions such as mortgage arrears and unpaid child maintenance. Bankruptcy normally lasts one year, after which the person is discharged regardless of how much is still owed. nidirect adds that it may be difficult to get credit afterwards, as agencies pick up the details from the Insolvency Register and other sources.
Debt relief orders
The Department for the Economy describes a debt relief order (DRO) as lasting 12 months, during which the creditors named in it cannot take action to recover their money without the court’s permission. At the end, provided circumstances have not changed, the person is freed from the debts included. DROs do not involve the courts; they are made through a partnership between the Insolvency Service and approved intermediaries, skilled debt advisers who help with the application.
The Department lists conditions including an inability to pay debts, a car worth no more than £4,000, other assets not exceeding £2,000, disposable income of no more than £75 a month, residence or business in Northern Ireland within the last three years, no other DRO within six years and no other formal insolvency procedure. It says the scheme is not suitable for homeowners because of the asset limits. The Department consulted in 2022 on raising the monetary limits in line with England and Wales, so the current figures should be checked on its page before relying on them. The equivalent process in England and Wales is described in the guide to debt relief orders in England and Wales.
IVAs and administration orders
An IVA is an arrangement in which an insolvency practitioner helps the person negotiate repayment terms. An administration order is made by the Enforcement of Judgments Office, which orders the person to make payments and then distributes them to creditors.
Where to get help and other nations
The Insolvency Service and its approved intermediaries handle DRO applications, and nidirect and the Department publish further guidance. For borrowers elsewhere in the UK, see the guides to bankruptcy in England and Wales and debt solutions in Scotland.
FAQs
Where are bankruptcy petitions heard in Northern Ireland?
nidirect says petitions can only be presented in the High Court in Belfast.
How long does bankruptcy last in Northern Ireland?
nidirect says it normally lasts one year, after which the person is discharged regardless of how much they still owe.
Do debt relief orders go through the courts?
No. The Department for the Economy says DROs do not involve the courts and are made through the Insolvency Service and approved intermediaries.
Can a creditor make me bankrupt in Northern Ireland?
nidirect says a creditor can present a petition if the person owes an unsecured debt of over £5,000, which may be the total of two or more debts.
The bottom line
Borrowers in Northern Ireland have their own formal debt solutions: bankruptcy through the High Court in Belfast, debt relief orders through the Insolvency Service and approved intermediaries, IVAs and administration orders. nidirect and the Department for the Economy set out fees, eligibility conditions and the effects of each, and the monetary limits for DROs are subject to change. Informal arrangements with creditors are described as the first alternatives to consider.