Bankruptcy in England and Wales: How It Works and What Happens

How bankruptcy works in 2026

You apply online to an adjudicator at the Insolvency Service and pay a £680 fee. If the adjudicator agrees you can't pay your debts, they make a bankruptcy order. The Official Receiver then takes control of your finances, deals with your creditors and decides what assets should be sold. You're usually discharged after 12 months, and most of your debts are written off.

There's no court hearing when you apply yourself. A creditor can also make you bankrupt by petitioning the court if you owe them £5,000 or more. Scotland has a separate process called sequestration (including the Minimal Asset Process), and Northern Ireland has its own bankruptcy rules.

1. Get free advice

   Talk to a free debt adviser first (see our free help page). Bankruptcy isn't always the best option — a Debt Relief Order is free if you qualify, and an IVA may protect your home.

2. Prepare

   Gather details of your debts, income, spending and assets. Many people open a basic bank account with a bank they don't owe money to before applying.

3. Pay the fee and apply online

   You can pay the £680 in instalments; the application is submitted once it's paid in full.

4. The adjudicator decides

   An adjudicator checks your application and, if you're eligible, makes a bankruptcy order — normally within 28 days.

5. The Official Receiver contacts you

   You'll be asked for information and documents and may be interviewed, usually by phone. You must co-operate and be honest.

6. Assets and income are dealt with

   The Official Receiver (or a trustee) decides what to sell and whether you should make income payments.

7. Discharge

   You're usually automatically discharged 12 months after the bankruptcy order, and most debts are written off. Income payments can continue after that.

Bankruptcy timeline: key dates

How much does bankruptcy cost?

Applying for bankruptcy costs £680. This is made up of the adjudicator's fee and a deposit towards the Official Receiver's costs. You can pay it in instalments through the government's online service, but your application isn't submitted until the full amount has been paid. There's no fee waiver, so if you have very little income and few assets, check whether you qualify for a free Debt Relief Order first.

You don't need to pay anyone else to go bankrupt. Free debt advice services can help you decide and guide you through the application.

What are the consequences of bankruptcy in the UK?

The main consequences are: your assets, including equity in your home, can be sold; you may have to pay part of your income for up to 3 years; you can't borrow more than £500 without saying you're bankrupt; you can't act as a company director without court permission; your bankruptcy is public; and it stays on your credit file for 6 years. Most restrictions end when you're discharged, usually after 12 months.

Bankruptcy doesn't stop you travelling, voting or claiming benefits, and your partner's own credit file isn't affected unless you have joint finances.

What happens to your home if you go bankrupt?

If you own your home, your share of any equity becomes part of your bankruptcy estate and may be used to pay your creditors. The trustee may sell it, or let a partner, relative or friend buy your share. If there's very little equity (below £1,000), a court won't normally order a sale. If the trustee hasn't dealt with your interest within 3 years, it usually returns to you. Keep paying your mortgage — it isn't written off.

If you rent, bankruptcy doesn't usually affect your tenancy as long as you keep paying the rent. Rent arrears can be included in the bankruptcy, but a landlord may still be able to seek possession, so get advice — see our eviction and rent arrears guide. Homeowners who want to keep their home often look at an IVA instead.

Can I keep my car and belongings?

You can usually keep a vehicle if you need it (for example for work or family care) and it isn't worth more than a reasonable replacement. There's no fixed value limit: if your car is worth a lot, the Official Receiver may sell it and give you some of the money to buy a cheaper one. A car on hire purchase or conditional sale belongs to the finance company until paid off; talk to an adviser about what happens to it.

You can also keep household items you need for basic living (clothes, bedding, furniture, kitchen equipment) and tools or equipment you need for your job. Valuable items, investments and second properties may be sold.

Bank accounts, wages and pensions

Will my bank account be frozen?

Your bank will usually freeze your accounts when it's told about the bankruptcy order. The Official Receiver can release money you need for essential living costs. If you owe money to your bank (for example an overdraft or loan), it may take money from your accounts to pay it, so it's common to open a basic bank account with a different bank before you apply. After the order, you can open a basic account, but you must tell the bank you're bankrupt.

Will I have to make payments from my income?

If you have money left over after reasonable living costs, you may be asked to make monthly payments under an Income Payments Agreement (or a court may make an Income Payments Order). These last up to 3 years, even though you're usually discharged after 1 year. If you have no spare income, you won't have to pay anything.

What happens to my pension?

Most registered pension savings are protected and not used to pay your creditors. But if you're already drawing a pension, the income counts towards working out whether you should make income payments.

Will bankruptcy affect my job or business?

Most people keep their jobs, and employers aren't normally told. But some jobs and professions have rules about bankruptcy — for example solicitors, accountants, some financial services roles, some police and armed forces roles, and positions requiring security vetting. Check your employment contract and professional body before you apply.

If you're self-employed, you may be able to keep trading, but business assets may be sold and you mustn't trade under a different name without telling people the name you were made bankrupt in. You can't be a company director while bankrupt without court permission. Self-employed people can get free help from Business Debtline (0800 197 6026).

How much do creditors get back in the pound?

It varies, and in many bankruptcies creditors get little or nothing. Creditors are paid a "dividend" only from money raised from your assets and income payments, after the costs of the bankruptcy have been paid. Where someone has no assets and no spare income — which is common — there may be no dividend at all. Where there is home equity or other valuable property, creditors may get a share, expressed in pence per £1 owed.

Some debts are paid before ordinary creditors (for example certain amounts owed to employees and some tax debts). Creditors can usually get information on expected dividends from the Official Receiver or trustee.

Why does the law allow people to go bankrupt?

Bankruptcy exists to deal fairly with debts that can't be paid. It shares whatever the person has fairly between creditors, stops creditors competing to enforce, and gives an honest person a realistic fresh start rather than leaving them in debt for life. Safeguards such as restrictions orders, income payments and investigation by the Official Receiver are there to prevent abuse.

Which debts are written off in bankruptcy?

Joint debts: the other person remains liable for the whole debt and the creditor can chase them.

Life after bankruptcy

Once you're discharged, the restrictions end (unless you have a restrictions order) and you're released from most of your debts. Your entry is removed from the Insolvency Register shortly after discharge. Any Income Payments Agreement continues until its end date.

• Credit: the bankruptcy stays on your credit file for 6 years from the date of the order. Credit is harder and more expensive to get during that time. Check your credit reports are accurate after discharge.
• Mortgages: some lenders will consider people who've been discharged, often with a bigger deposit and higher rates; options improve after the 6 years.
• Rebuilding: keep up with bills, register to vote, and avoid high-cost credit. Some people use a credit-builder product and repay it in full each month.

Alternatives to bankruptcy

Frequently asked questions