What is bankruptcy in the UK?

Bankruptcy is a formal way to deal with debts you have no reasonable prospect of repaying. In England and Wales you apply online through gov.uk; in Northern Ireland the process goes through the courts; Scotland uses sequestration instead. Once a bankruptcy order is made, an official receiver or trustee takes control of your assets to pay creditors.

Most unsecured debts — credit cards, loans, overdrafts, utility arrears and council tax — are included and written off when you are discharged, usually after 12 months. Some debts survive bankruptcy, including student loans, court fines, child maintenance and fraud-related debts. Secured debts such as mortgages remain — the lender can still repossess if you fall behind.

The impact is severe. Your bank account may be frozen briefly, valuable assets can be sold, and if you have significant home equity the trustee may force a sale or seek contributions. You may face income payment orders for three years if you have surplus income. Bankruptcy appears on the Individual Insolvency Register and your credit file for six years.

Bankruptcy is not the only option. A Debt Relief Order suits lower debts and minimal assets; an IVA may preserve home ownership if you have regular income. Free debt advice through MoneyHelper and charities helps you compare routes. Applying for bankruptcy costs £680 in England and Wales — waivers may be available if you are on a low income.