Bankruptcy in the UK: What It Means and How It Works

Data last checked on 8 October 2026.

Checked against mygov.scot, GOV.UK, legislation.gov.uk and one other official source. Edited by Steven Butler.

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Bankruptcy is one way to deal with debts you cannot pay, and it could free you from most of them, although some, like child maintenance debts or student loans, you might still have to pay. In England and Wales you can only apply online, it costs £680, and the adjudicator should confirm within 28 days whether you have been made bankrupt. The process is different in Scotland and Northern Ireland.

Key points

✓In England and Wales you can only apply for bankruptcy online, it costs £680, and the adjudicator should confirm within 28 days whether you have been made bankrupt.
✓The trustee might sell your family home, depending on how much equity would be left after secured debts such as a mortgage were paid.
✓You must continue to pay debts such as those from fraud, those not included in the bankruptcy such as to the Student Loans Company, and secured debts like a mortgage if you stay in the property.
✓While you are bankrupt you cannot borrow more than £500 without telling the lender, or act as a director of a company without the court's permission.
✓The process is different in Scotland and Northern Ireland.

Northern Ireland and Scotland: different processes

In Northern Ireland the High Court can declare you bankrupt by making a bankruptcy order after a bankruptcy petition, and bankruptcy petitions can only be presented in the High Court in Belfast. You pay a £525 deposit to administer your bankruptcy and a £189 court fee, plus a fee due to a solicitor before whom you swear the contents of your statement of affairs. Bankruptcy in Northern Ireland usually lasts for a year.

In Scotland you need to apply for bankruptcy through an approved money adviser and cannot apply yourself; the adviser sends an online application to the Accountant in Bankruptcy, a part of the Scottish Government, which decides if you can go bankrupt. The Minimal Asset Process (MAP) is for people with few assets and no disposable income who owe less than £25,000, and you are bankrupt for 6 months if you go through it. Full Administration is for people who do not qualify for MAP and owe at least £3,000, and you are usually discharged after one year.

Who should consider bankruptcy?

There are two ways you can be made bankrupt: you can apply for bankruptcy yourself, or you can be made bankrupt when someone you owe money to applies for it.

There are other options for dealing with your debts that do not restrict what you can do as much as bankruptcy does, and before you apply you should find out about them. Our dealing with debt guide covers the alternatives.

Yes: A creditor can apply to a court to make you bankrupt if you do not pay your debts and you owe £5,000 or more, or if you break the terms of an Individual Voluntary Arrangement
Yes: Before that, the people or organisations you owe money to have to try other legal ways to get you to pay, usually a statutory demand or a court judgment, and the court sets a hearing date at least 14 days after you were given the petition
Yes: You can oppose a petition if you do not agree with it, at least 5 days before the hearing, with no court fee but possible costs if you are not successful

The adjudicator will see if any other money, for example your pension or savings, could be used to pay your debts instead, and if you have access to other money and it covers your debts, the adjudicator might refuse to make you bankrupt.

What debts are included in bankruptcy?

Under section 281 of the Insolvency Act 1986, when a bankrupt is discharged the discharge releases them from all the bankruptcy debts, subject to exceptions.

Debts you must still pay:

No: Debts you have from fraud you have carried out
No: Debts which were not included in the bankruptcy itself, for example to the Student Loans Company
No: Secured debts, like a mortgage if you continue to live in a mortgaged property
No: Money owed to the Department for Work and Pensions for budgeting or crisis loans
No: Liability in respect of a fine imposed for an offence, including a criminal courts charge or a confiscation order under the Proceeds of Crime Act 2002

Debts you might still have to pay, unless the court decides you do not have to:

No: Anything you owe under family proceedings, like child maintenance debts
No: Damages for personal injuries to anyone

Our child maintenance guide covers what happens to arrears.

The bankruptcy process

Apply online (England and Wales)

You can only apply online, it costs £680, and the adjudicator should confirm within 28 days whether you have been made bankrupt, though it can take longer if they need to ask you more questions. You cannot submit your application until you have paid the full fee, and you can pay in instalments if you cannot afford to pay it all at once. You will need to provide information about your income, outgoings and debts, including wage slips, benefits or pension statements, bills, and letters from a bailiff or enforcement agent.

Adjudication

An adjudicator who works for the Insolvency Service checks if your application meets the requirements; if the adjudicator decides you can be made bankrupt they will accept your application and issue a bankruptcy order, then pass your case on to an official receiver. Your name will be added to the Land Charges register, which lenders can search if you apply for a mortgage, and if you are the sole owner of a property HM Land Registry will add an entry to the register it holds for your property, which might mean you cannot sell it.

Official Receiver takes over

You will usually hear from the official receiver within 2 weeks of getting your bankruptcy order, and the official receiver will usually deal with your bankruptcy from start to finish and will also be known as the trustee. The official receiver will send a report to the people and organisations you owe money to, including details of the things you own and your debts, which usually takes 4 weeks but can take up to 12, and might want to interview you. You must give the official receiver or trustee any information they ask you for; if you do not, they can ask the court to order you to go to court and explain why or to delay the end of your bankruptcy so it lasts longer.

12-month discharge

A bankrupt is discharged at the end of the period of one year beginning with the date on which the bankruptcy commences, and GOV.UK says that after 12 months you are usually released automatically, though it can take longer if you do not co-operate with the trustee. After you are discharged the official receiver or trustee will continue to deal with your bankruptcy, carrying on selling your possessions that were included in it.

Income Payments Agreement or Order

The trustee will tell you if they think you can make monthly payments from your spare income; you will only have to do this if you and the trustee agree you can afford it, the arrangement can last for up to 3 years and is called an income payments agreement, and if your main or only income is from state benefits your trustee will not normally ask for one. If you do not agree, your trustee can ask the court to order you to make monthly payments, called an income payments order; you must keep paying until it finishes, even after your bankruptcy has ended, and an order cannot end after the period of three years beginning with the date on which it is made. If you do not make your payment the trustee can ask your employer to take the money directly from your wages, make you bankrupt for longer, or take legal action to get the money.

Your name and address will be published in the Gazette and the Individual Insolvency Register, but if having your address published will put you at risk of violence you can apply to the court for a person at risk of violence order. Your bankruptcy can stay on your credit reference file for 6 years from the date of your bankruptcy, and your name will usually be removed from the Land Charges register after 5 years. You can apply to cancel your bankruptcy if the order should not have been made, all your debts and bankruptcy fees have been paid or secured by a third party, or you have made an Individual Voluntary Arrangement.

What you keep and what you lose

If the trustee has not started to deal with your family home within 3 years it will usually be transferred back to you; under section 283A of the Insolvency Act 1986 an interest in a dwelling-house that was your sole or principal residence ceases to be part of your estate at the end of three years from the date of the bankruptcy, unless within that period the trustee realises the interest or applies for an order for sale or possession.

If you are the sole owner the legal ownership of your home is transferred to the trustee along with any equity, and if you own the property with someone else any equity you have is transferred to the trustee while you still own the property with the other joint owners; the sale can be delayed for up to 1 year if you need to organise somewhere for children or a partner to live. If you rent, your landlord might be told you are bankrupt, but it is unlikely you will be asked to move out if you are up to date with your rent.

You can usually keep:

Yes: Things you need for your job, like tools or a vehicle
Yes: Essential household items, like clothing, bedding and furniture
Yes: A vehicle, if other transport is not practical, to meet your household's basic needs, care for someone else such as a disabled relative, or do your job
Yes: Any money you have previously put into a UK pension

You might have to give up these items, including vehicles, if they are worth more than a reasonable replacement, in which case the trustee will either use the money from the sale to pay for a cheaper item or give you the money to buy one. If you are getting pension payments when you are made bankrupt, those payments usually count as income. The trustee will decide how much money you need to cover your expenses, including rent or mortgage payments, bills, food, clothing, house insurance, phone expenses and vehicle expenses.

The bank will usually freeze your accounts; if you need money urgently, for example to buy food, your trustee can ask your bank to give it to you and the bank will decide whether to let you have it, and your bank can use money from your accounts to pay other debts you hold with them, called set off.

While you are bankrupt you cannot:

No: Borrow more than £500 without telling the lender you are bankrupt
No: Act as a director of a company without the court's permission
No: Create, manage or promote a limited company without the court's permission
No: Run a business without giving your name when you were made bankrupt to the people you do business with

You might be prosecuted if you break the restrictions, and they last until your bankruptcy ends or you successfully apply to cancel it. The official receiver can get the restrictions extended, for up to 15 years, if they believe you have acted carelessly or dishonestly, by asking you to agree to a bankruptcy restrictions undertaking or, if you do not agree, by asking the court to make a bankruptcy restrictions order.

Where to go next

Frequently asked questions

What types of bankruptcy are there in the UK?

There are two ways you can be made bankrupt: you can apply for bankruptcy yourself, or you can be made bankrupt when someone you owe money to applies for it. The process to become bankrupt is different if you live in Scotland or live in Northern Ireland. In Scotland the Minimal Asset Process (MAP) is for people with few assets and no disposable income who owe less than £25,000, and you are bankrupt for 6 months if you go through it. Full Administration is for people who do not qualify for MAP and owe at least £3,000, and you are usually discharged after one year. In Northern Ireland bankruptcy petitions can only be presented in the High Court in Belfast.

What debts does bankruptcy clear?

Under section 281 of the Insolvency Act 1986, when a bankrupt is discharged the discharge releases them from all the bankruptcy debts, subject to exceptions. GOV.UK says you must continue to pay debts you have from fraud you have carried out, debts which were not included in the bankruptcy itself such as to the Student Loans Company, secured debts like a mortgage if you continue to live in a mortgaged property, and money owed to the Department for Work and Pensions for budgeting or crisis loans. You might still have to pay anything you owe under family proceedings, like child maintenance debts, and damages for personal injuries to anyone, unless the court decides you do not have to.

What happens to my home if I go bankrupt?

The trustee might sell your family home, depending on how much equity would be left after any secured debts such as a mortgage were paid, and if your equity is more than £1,000 the trustee can either sell the property or apply for a charging order. If the trustee has not started to deal with your family home within 3 years it will usually be transferred back to you. If you rent, it is unlikely you will be asked to move out of the property if you are up to date with your rent.

How long does bankruptcy last?

A bankrupt is discharged at the end of the period of one year beginning with the date on which the bankruptcy commences, and GOV.UK says that after 12 months you are usually released automatically, though it can take longer if you do not co-operate with the trustee. The official receiver can get the restrictions extended, for up to 15 years, if they believe you have acted carelessly or dishonestly.

What is an Income Payments Agreement in bankruptcy?

What is sequestration in Scotland?

How does bankruptcy work in Northern Ireland?

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https://www.knowyourrightsuk.com/debt/bankruptcy

Know Your Rights UK. "Bankruptcy in the UK: What It Means and How It Works." Know Your Rights UK, https://www.knowyourrightsuk.com/debt/bankruptcy