Bankruptcy

What bankruptcy means

Bankruptcy deals with debts that you cannot repay, and a trustee manages the process. Qualifying debts may be written off, but some debts remain payable. Procedures differ across the UK; in Scotland the equivalent process is sequestration.

What can happen to your home and assets

Your home, savings and other assets may be used to repay creditors. Some essential possessions may be protected, but do not assume you will keep a home or vehicle. Individual advice is essential.

Payments and discharge

Discharge commonly occurs after 12 months, but it is not guaranteed in every case. If you have surplus income, you may be required to make payments beyond discharge. Restrictions can also last longer.

Important things to consider

• Your credit rating is affected, and bankruptcy normally remains on your credit file for six years.
• You appear on a public insolvency register, and some jobs or business roles can be affected.
• Application costs and procedures depend on where you live.
• Certain debts, including some fines and student loans, are not normally written off.

Consider all options first

Speak with a qualified adviser before making a decision. A DRO, IVA, DMP or another approach may be appropriate depending on your situation.