Bankruptcy
Bankruptcy is a legal process that declares you unable to pay your debts. It can write off most unsecured debts within 12 months, but it has significant consequences — including the potential loss of your home and other assets.
When Is Bankruptcy the Right Choice?
Bankruptcy may be appropriate when:
- You have substantial debt you cannot repay in a reasonable timeframe
- You have no realistic prospect of entering an IVA or DMP
- You have minimal assets (or are willing to lose them)
- You need a fresh start quickly
How Bankruptcy Works
- You apply online (or through a court) and pay the £680 fee
- An Official Receiver is appointed to review your case
- Your assets are reviewed — non-essential assets may be sold
- You are discharged after 12 months — most debts are written off
- Any income payment agreement lasts for 3 years (if you have surplus income)
What Bankruptcy Writes Off
✅ Credit cards, personal loans, overdrafts, payday loans, utility arrears, council tax
❌ Student loans, court fines, child support, fraud-related debts
Bankruptcy vs IVA — Key Differences
| Bankruptcy | IVA | |
|---|---|---|
| Duration | Discharged in 12 months | 5-6 years |
| Home | May be sold | Usually protected |
| Assets | May be sold | Generally retained |
| Public record | Yes — bankruptcy register | Yes — insolvency register |
| Credit impact | 6 years | 6 years |
| Cost | £680 | Built into monthly payments |
| Profession restrictions | Some roles affected | Fewer restrictions |
An IVA is almost always preferable to bankruptcy if you qualify, because you keep your home and assets. Bankruptcy is generally a last resort.
Want to explore alternatives to bankruptcy? Check your qualification → — you may be eligible for an IVA or DRO instead.
Check If You Qualify
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