Common beliefs about bankruptcy, set against what the official process in England and Wales actually involves: what it writes off, what it costs, how long it lasts and when another option may fit better.
Need to know
- Applying for bankruptcy in England and Wales costs £680, payable in instalments but in full before you submit.
- Discharge usually happens 12 months after the bankruptcy order, when most outstanding debts are written off.
- Debts such as fines from the courts, student loans and arrears on child maintenance may not be covered by bankruptcy.
- There is no minimum amount of debt needed to apply yourself, and applications have been online since 6 April 2016.
- Your bankruptcy appears on the Insolvency Register and the Gazette, not in a newspaper unless there is serious public concern.
Bankruptcy is a formal way of dealing with debts that you cannot pay. In England and Wales you apply for it online, and once the process ends, most outstanding debts are written off. It is a serious step, and the myths around it can stop people asking for help at all. Here is what the official rules actually say.
Myth: Bankruptcy Clears Absolutely Every Debt
The fact: it clears most debts, not all. Discharge, the point at which your bankruptcy restrictions formally end, typically falls 12 months after the bankruptcy order was made, and most of what you still owe is written off at that stage. Some debts survive, though. Citizens Advice lists penalties from the courts, student loans and money owed for child maintenance as examples of debts you might still have to pay.
This matters when you are weighing the decision. If much of what you owe falls into those categories, bankruptcy may not lift the pressure. If you need time to compare options first, Breathing Space is a scheme that stops most types of enforcement and stops most creditors applying interest and charges for 60 days.
Myth: You Will Automatically Lose Your Home and Belongings
The fact: what happens depends on what you own. While you are bankrupt, your assets, meaning the things you own, might be used to pay your creditors. The trustee, who is put in charge of managing your bankruptcy, takes over your valuable assets once the order is made.
Before making you bankrupt, the adjudicator, a government official employed by the Insolvency Service, checks whether other money, such as savings or a pension, could pay your debts instead, and might refuse the application if it would. If you are the sole owner of a property, HM Land Registry adds an entry to the register it holds for it, which might mean you cannot sell it.
Myth: Going Bankrupt Is Free
The fact: applying costs £680. You can pay in instalments of at least £5, but you cannot submit your application until the full fee has been paid. If raising the money is a struggle, a charity may be able to help; Citizens Advice suggests searching the Turn2us website for grants.
Helpful step
If the £680 fee is the main barrier, ask a free debt adviser about grants and charities that sometimes help with it, rather than borrowing to cover it.
You will also need details of your income, outgoings and debts, including bills such as electricity, credit cards and council tax.
Myth: You Will Have to Go to Court and See Your Name in the Paper
The fact: the process moved online. Since 6 April 2016, people applying to make themselves bankrupt in England and Wales have submitted an online application to an adjudicator instead of going through a court. The adjudicator is not a judge but a government official working for the Insolvency Service, and you do not attend a court hearing. They have up to 28 days to make a decision, although it usually takes less time.
Your bankruptcy will not appear in a newspaper unless there has been serious public concern about, or many complaints over, how you handled your financial affairs. It will appear on two government websites, the Insolvency Register and the Gazette. Your address will also be publicly available, and if that puts you at risk of violence, you can apply for a ‘person at risk of violence’ order before submitting your application.
Myth: It Wrecks Your Finances for Life
The fact: the restrictions usually last 12 months, and discharge ends them. While you are bankrupt, most of your creditors, the people and organisations you owe money to, cannot chase you for the debt or start court proceedings against you, and after discharge most outstanding debts are written off. The Insolvency Service describes this as being able to make a fresh start.
Records do outlast the discharge itself. Your name is added to the Land Charges register, which lenders can search if you apply for a mortgage, and bankruptcies are listed on the Individual Insolvency Register. So the effects run longer than a year, but they are not permanent in the way the myth implies.
Myth: You Need to Owe a Fortune to Qualify
The fact: there is no minimum amount of debt you must owe before applying to make yourself bankrupt. What the adjudicator checks is whether you cannot pay your debts as they fall due, and whether other money could cover them.
The £5,000 figure people sometimes mention works differently: a creditor who wants to bankrupt someone else must prove they are owed at least £5,000, or a share of debts totalling at least that amount. That threshold applies to creditors, not to people applying for themselves.
When a Different Debt Solution May Fit Better
GOV.UK is direct about this: other options for dealing with your debts do not restrict what you can do as much as bankruptcy does. Which one fits depends on how much you owe, what you own and what you can realistically pay.
If your debts and assets are modest, a Debt Relief Order may be worth asking about; our beginner’s guide explains who qualifies and how it works. If you have regular income and could repay some of what you owe, an individual voluntary arrangement (IVA) is another formal option, and our timeline for an IVA sets out what happens and when.
Start by writing down every debt you owe, then take the list to a free debt adviser, who can replace the myths with numbers from your own circumstances.
Your questions answered
Q: How much does it cost to go bankrupt in England and Wales?
A: The application fee is £680. You can pay in instalments of at least £5, but the full amount must be paid before you can submit your application.
Q: How long does bankruptcy last?
A: The restrictions usually last 12 months and end with discharge. Records such as the Land Charges register and the Individual Insolvency Register outlast that period.
Q: Which debts are not written off in bankruptcy?
A: Fines from the courts, student loans and money owed for child maintenance are examples of debts you may still have to pay. A debt adviser can help you check which of your debts would be covered.
Q: Do I have to go to court to be made bankrupt?
A: No. Since 6 April 2016, applications in England and Wales are made online to an adjudicator at the Insolvency Service, who has up to 28 days to decide.
This guide is general information, not financial advice. Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk. We don’t arrange loans or work with lenders. Before borrowing, check the lender is authorised on the FCA register, and consider free debt advice from MoneyHelper, StepChange, National Debtline or Citizens Advice.