Is Becoming Bankrupt Right for You?

Declaring yourself bankrupt can be a huge relief if you’ve been struggling with large and unsustainable debt for a while. It can feel like a whole new start, but you also have to be aware that bankruptcy comes with consequences and conditions that can have big impacts on your professional and personal life. 

You should only see bankruptcy as a last resort, so make sure you haven’t overlooked other potential solutions first. If you’re sure that it’s the right way forward, then visit this site for help and advice. The Citizen's Advice Bureau is also a great site for impartial advice. 

Bankruptcy might be best for you if:

  • you have no reasonable way to pay off your debts;
  • there’s little or no equity in your home and you don’t possess anything of value;
  • your situation isn’t likely to improve in the near future (12-18 months), and
  • you live in England or Wales, you have a business there, or you have done so within the last three years but you now live permanently in another EU country (Denmark excepted).
There’s no minimum debt that qualifies for bankruptcy as it’s about whether your unsecured debts total more than the value of your assets and property. However, in practice, it’s people with more than £20,000 in debts that suit bankruptcy most.

Bankruptcy may not be suitable for you if:

  • your debts come to less than £20,000 and your possessions (apart from essential household equipment and a vehicle worth less than £1,000) are worth less than £1,000. In these circumstances, a debt relief order may be better;
  • you’re in a profession like accountancy, law or financial services, as many professional associations bar bankrupt people from joining;
  • you prefer to keep your financial situation private;
  • your financial circumstances are likely to get better in the near future – you’re waiting for an inheritance or other windfall, for example, and
  • your pension fund is worth more than your debt.
Other things you need to think about

You need to consider the consequences of bankruptcy before applying.

Can you afford to pay the £680 fee?
The fee is £680, but you can pay in instalments starting at £5 if you pay online.

You may lose your home
If your debt is large enough then your home may be sold to pay creditors.

You’ll find it tough to get credit for several years
Becoming bankrupt will probably mean several years of difficulty in getting credit, mortgages and starting new businesses.

Keeping your possessions
You’re allowed to retain essential household items and a vehicle that’s worth less than £1,000. Anything else may be sold to pay creditors.

There are more restrictions
Your bankruptcy will last for 12 months and during this period you’ll need to follow set rules in your personal and professional life.

Bankruptcy won’t clear all your debts
If you have other debts, like student loans, magistrate court fines and maintenance payment arrears, you’ll find that these aren’t covered by your bankruptcy so you’ll still have to pay them.

Your bankruptcy will be in the public domain
Bankruptcies are listed in public records so anyone can view them. If you have safety concerns for yourself and your family because of this then you can ask for a court order to stop your details being published.

*Collaborative post


  1. I think it's so sad that some people have no other option than to declare themselves bankrupt, but if it's right for you then it's for the best x

  2. I think for many it is but I hope to never be in that situation