Everything you need to know about Bankruptcy

Our Bankruptcy pages will explain everything you need to know and what you need to consider when thinking about Bankruptcy.

Call us today
0800 048 1764

What is Bankruptcy?

Bankruptcy is a formal insolvency procedure that may have long-lasting effects on an individual and should not be considered without serious thought.

Bankruptcy may be considered where existing debts far outweigh your existing income and assets with little prospect of paying it back within a reasonable timescale. After Bankruptcy your debts will be written off, however being Bankrupt may negatively affect your long term financial plans.   You may lose control of valuable assets, and be required to make contributions from your income for up to three years.

How does bankruptcy work?

You can be made Bankrupt in three ways:

  1. By a creditor
  2. By an IVA Supervisor application
  3. Petitioning for your own bankruptcy

By a Creditor

In order for a bankruptcy petition to be served against you, three conditions must be met. The debt must be a minimum of £5,000 (this limit was revised as of October 2015). You must have been a permanent resident of the UK within the last three years, for a period of six months or more and have little or no realistic ability to repay your debts after failing to satisfy a statutory demand from a creditor.

By an IVA Supervisor application

If you are currently in an IVA your supervisor can petition for bankruptcy on the following grounds:

  • Supplying false or misleading information on which the arrangement is based
  • Failing to keep to the terms to the arrangement.

Petitioning for your own bankruptcy

From April 2016 you can petition for bankruptcy online. You will need to submit details of your current financial circumstances inclusive of income, expenditure and debts. Your application will then be reviewed by an adjudicator who decides if you should be made bankrupt or not.

If you are considering doing this yourself we strongly advise getting professional legal and financial advice beforehand.

Should a bankruptcy Order be issued the Official Receiver will review your liabilities, assets and contact your creditors.

In the event the application is rejected you have 14 days to request a review.

If the adjudicator upholds the original decision then you have 28 days to appeal the decision to the court. The court will then either grant or deny an order.

Within 12 months from the date of your bankruptcy, on the assumption you have met all your legal obligations, you should be discharged. You can however be subject to an Income Payment Agreement for up to three years. This requires you to make monthly payments towards those debts, from any disposable income, after your essential bills have been met.

How do I qualify for bankruptcy?

If you have outstanding debts which you have little prospect of paying back, and you are unable to release assets to repay your debts, then Bankruptcy may be the best course of action.

If you owe a creditor at least £5,000 then they could petition for your Bankruptcy. There are some debts which are excluded from Bankruptcy. These include fraudulent benefit and tax credit overpayments, secured debts, child maintenance arrears, court fines, student loans, personal Injury claims made against you and any debts obtained by fraudulent means.

Is Bankruptcy right for me?

Being declared bankrupt may have consequences. These include:

  • A detrimental effect on your credit score for up to six years after you have been declared Bankrupt.
  • Any assets that you own may need to be sold to pay back your creditors. This excludes any items required for work purposes but can include your home, high value items and your car.
  • Any substantial rewards or assets you receive, e.g.  an inheritance or lottery win, before being discharged from Bankruptcy can be claimed back in order to pay your creditors.
  • Details of Bankruptcy are made public.
  • You may be required to make payments to creditors for up to three years from money which is remaining after your essential bills and other expenses are paid. Failure to do so may delay your discharge from Bankruptcy.
  • If borrowing above £500 you are obliged, legally, to inform prospective lenders of your Bankruptcy. The likelihood of obtaining further credit at a competitive rate will be slim.
  • There are selected employers who will not employ persons subject to Bankruptcy proceedings. Some landlords or letting agents may refuse to applications for those who have been declared Bankrupt.

Bankruptcy FAQs

Some answers you may need about Bankruptcy can be found here. While this may help you understand Bankruptcy we would strongly recommend that you get qualified legal and financial advice before agreeing to anything.

What if my personal circumstances change during Bankruptcy?

During Bankruptcy you will be required to inform your Trustee about changes to your financial circumstances. You may be subject to an Income Payment Order that requires you to contribute monthly payments for up to three years. If your circumstances change for the better then you may be required to increase your payments while the order is in place. Any money obtained through a windfall or inheritance prior to being discharged can be used towards paying existing debts. If you do not co-operate with your Trustee then your discharge from Bankruptcy could be delayed. 

How much does Bankruptcy cost?

The total fee to petition for your own bankruptcy is £680 from 21st July 2016.

This is made up of the Official Receiver’s fee of £550 and the application  fee of £130.  You can pay this fee online in instalments, however the application will not be processed until the payment has been made in full.

How does Bankruptcy affect my credit rating?

Bankruptcy leaves a footprint on your credit file for six years after discharge. IMPORTANT – a number of financial providers will ask you to state if you have ever been made bankrupt when applying for credit or other financial products. As a result Bankruptcy could have an impact on your ability to get credit for a substantial period of time.

How long does Bankruptcy last?

If you meet all your obligations, as required you are likely to be discharged 12 months being declared bankrupt.  You may be required to make monthly payments for up to three years to pay to creditors, depending on your circumstances. If you have been deemed to have acted irresponsibly with your finances during this period, or not co-operated with your Trustee, then your discharge may be delayed.

What debts are excluded from Bankruptcy?

The debts which are excluded from Bankruptcy include fraudulent benefit and tax credit overpayments, secured debts, child maintenance arrears, court fines, student loans, personal Injury claims made against you and any debts obtained by fraudulent means.

What happens to my creditors in Bankruptcy?

The Official Receiver will notify your creditors of any relevant Bankruptcy Order. As a result it means they can’t directly pursue you for the repayment of those debts. Instead they will deal with the Official Receiver and any subsequent Trustee that may be appointed.  Your creditors will be required to provide details of debts that are outstanding to them in order to make a claim. Any debts which were subject to Bankruptcy proceedings are written off upon your discharge. You may however be subject to an income payments order for a period of up to three years from the date of the Bankruptcy Order. This means you are required to make a monthly contribution after your essential bills and living expenses are met from your income.


  • Get help now

    Fill in your details and one of our friendly advisors will be in touch.

  • By submitting your details you are accepting our privacy policy
  • This field is for validation purposes and should be left unchanged.

Additional Customer Benefits

Our customers get access to additional services to help improve their financial circumstances. These include:

TV, broadband and landline comparison 

Available to everyone – even if you’re not a Harrington Brooks customer

Read More

Utility switching service 

Available to everyone – even if you’re not a Harrington Brooks customer

Read More 

vas-icon-legal-adviceLegal advice on associated debt issues

Only available to current active Harrington Brooks customers

Read More


Benefit and entitlement checks

Only available to current active Harrington Brooks customers

Read More

What Our Customers Say

Read More Reviews

Explore what's right for you

Getting free impartial advice
The Money Advice Service is an impartial service set up by the Government.
They provide free debt counselling, debt adjustment and credit information services.
visit Money Advice Service

General Enquiries

Please complete the form below and we’ll get in touch.

By submitting your details you are accepting our privacy policy

Get the right advice for you


No matter how big or small your problems may seem – we would always recommend that you look for professional advice, even if it’s not through us, before any financial issues start to cause sleepless nights. Read more…

Refer a friend


Know someone who may benefit from speaking to us?  If you refer a friend, who later becomes a paying customer, you’ll receive £100 worth of Tesco vouchers to spend. Read more…