What Could Happen If I Apply for Bankruptcy?

If you have found yourself in serious debt, bankruptcy offers a chance to make a fresh start and to be protected from people that you owe money to.

Depending on your circumstances, the current cost of going bankrupt in England and Wales is £655. The deposit of £525 towards the costs of administering your bankruptcy and the application fee of £130. For couples, each individual has to pay the fees separately.

What Will Be the Impact of Bankruptcy?

Before you make a decision it’s important that you understand exactly how bankruptcy will affect you.

  • Bankruptcy cannot be done in secret - it’s recorded and the data given to credit reference and other agencies. You should expect that your employer will find out about it. Additionally, if your home is rented, then your landlord is likely to become aware. Details of your bankruptcy are listed on the Insolvency Service website, therefore it is possible that friends or family members may find out about it.
  • You stand to lose any “non-essential” assets other than those which are essential to your domestic needs, tools of the trade, and vehicles that you need in order for you to do your job. The main effect of this is that, if you are a homeowner and there is equity in your property, you will be required to make the equity available. That could include being required to sell your home.
  • If you’re in arrears, the utility providers will be notified of your bankruptcy and you will need to set up a new account. The gas, electricity and telephone contracts may need to be put into the name of another adult that lives with you. If you live alone, you may be required to change these services to a prepayment system.
  • Until you have been discharged from bankruptcy, you will not be permitted to hold certain public offices. You will also not be able to continue as the director of a limited company.
  • You will have a severely limited access to credit until you are discharged from bankruptcy, which could mean that you pay significantly higher rates of interest until your credit rating is restored.
  • Your bankruptcy will not include all of your debts. These include a mortgage and other secured debts, magistrate court fines, debts payable after personal injury claims and debts to a student loans company.
  • If it is determined that you have acted recklessly or dishonestly this could affect the restrictions on your discharge from bankruptcy.
  • Your personal bank account may be affected and could be ‘frozen’ by your bank when they become aware of your bankruptcy order.

How Could Bankruptcy Benefit Me?

There are a number of ways in which bankruptcy can help you.

  • It is a chance to start afresh if you have a substantial debt problem, few assets, and a limited ability to pay your debts.
  • The period over which you pay back your debts will be limited.
  • You will have legal protection with respect to your debts.

If you live elsewhere in the EU, you can’t declare yourself bankrupt in England or Wales. If you live in Scotland or Northern Ireland we recommend you visit:
Northern Ireland