Bankruptcy is one way to deal with debts that cannot be paid, including credit card, loan and short-term credit debts that have become unmanageable. GOV.UK says it can lead to freedom from most debts, but that possessions may be sold and restrictions apply. The process described here is for England and Wales; GOV.UK says it is different in Scotland and in Northern Ireland.
Two routes into bankruptcy
GOV.UK says a person can be made bankrupt in two ways: by applying personally, or when a creditor applies. It advises looking at other options first, because alternatives to bankruptcy do not restrict a person as much. Only individuals can become bankrupt; the position for limited companies is different.
Applying yourself
The application can only be made online. On 21 September 2026 GOV.UK gave the fee as £680, payable in full before submission, in instalments if necessary, and the guide also states that a debt adviser can point to charities that may help with it. An adjudicator at the Insolvency Service checks whether the requirements are met and whether other money, such as a pension or savings, could pay the debts instead. If the application is accepted a bankruptcy order is issued and the case passes to an official receiver. GOV.UK says the applicant should hear within 28 days, although it can take longer if more questions are asked.
The applicant’s name goes on the Land Charges register, which lenders can search, and a sole owner’s property title can be restricted. Name and address are published in the Individual Insolvency Register and the Gazette, although a person at risk of violence can apply to the court for an order to keep the address out of publication.
When a creditor applies
GOV.UK says a creditor can apply to the court if the debtor owes £5,000 or more and has not paid, or has broken the terms of an Individual Voluntary Arrangement. Creditors have to try other legal routes first, usually a statutory demand or a court judgment. The court sets a hearing at least 14 days after the petition is given, and a debtor who wants to oppose must do so at least 5 days before the hearing using form Bank 6. At the hearing the court can make a bankruptcy order, stay or dismiss the petition, or adjourn.
What the official receiver and trustee do
The official receiver usually deals with the case and acts as trustee, checking the debtor’s finances, sometimes interviewing the debtor and sending a report to creditors. GOV.UK says the debtor must supply information, tell the trustee about changes in income or possessions, and disclose anything that needs protecting. Failing to co-operate can prolong bankruptcy.
The trustee decides how much of the debtor’s income is needed to live on. Spare income can be paid under an income payments agreement lasting up to 3 years, or under a court-ordered income payments order. Bank accounts are usually frozen, although a trustee can ask the bank to release money urgently needed.
Restrictions, home and possessions
While bankrupt, GOV.UK says a person cannot borrow more than £500 without telling the lender, act as a company director or create, manage or promote a limited company without court permission, or trade under a different name without disclosing the bankruptcy name. Breaching restrictions can lead to prosecution. Restrictions can be extended if the official receiver believes the person acted carelessly or dishonestly.
The trustee may sell a family home if equity exceeds £1,000, or apply for a charging order. If nothing has been done within 3 years, the home usually transfers back. A sole owner cannot sell without the trustee, while a joint owner’s equity passes to the trustee. Items needed for work or essential household goods can usually be kept unless worth more than a reasonable replacement.
Debts that remain and when it ends
Some debts continue, including those arising from fraud, student loans, secured debts such as a mortgage where the person stays in the property, and DWP budgeting or crisis loans. Child maintenance debts and personal injury damages may also remain unless the court decides otherwise.
GOV.UK says the person is usually discharged automatically after 12 months, although this can be delayed by lack of co-operation, and that the trustee keeps working after discharge. Bankruptcy can also be annulled, for example when the order should not have been made or all debts and fees are paid or an Individual Voluntary Arrangement is agreed.
FAQs
Can a limited company become bankrupt?
No. GOV.UK says only individuals can become bankrupt.
How long does bankruptcy usually last?
GOV.UK says discharge is usually automatic after 12 months, but it can take longer if the person does not co-operate.
Does bankruptcy apply the same way in Scotland?
No. GOV.UK says the process is different in Scotland and in Northern Ireland.
Bottom line
In England and Wales, bankruptcy starts either with an online application, which an adjudicator reviews, or with a creditor’s petition for a debt of £5,000 or more. It usually ends after 12 months but brings restrictions, possible sale of assets and a public record. This is general information, not financial or legal advice; free debt advice should be sought before applying, as other options may fit better.