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Bankruptcy is a formal court procedure which you can start or which one or more of your creditors owed at least £5,000 can start. Your assets (with certain exceptions) are sold to help pay your creditors. However, you can usually keep your personal belongings, the contents of your home and your tools of trade (which may include your car) unless they have a high value. If you have surplus income after meeting your essential household and personal expenses, you will have to make payments out of your income for up to 3 years.

Your assets and income are dealt with by a licensed and regulated insolvency practitioner or by a government official called the official receiver. Bankruptcy usually lasts for 1 year, and once you have been freed (discharged) from your bankruptcy, you are released from your debts (with certain exceptions).


 Debts are written off, with certain exceptions explained opposite.

Creditors cannot take further action unless the debts are secured on your home or other property.

It allows you to make a fresh start after only a year.

You may be able to avoid having to sell your home if your spouse, partner or a relative can buy your share of its value after any debts secured on it have been paid.

Your bankruptcy is entered on a public register and is advertised.

If you apply to the court for your own bankruptcy, you will have to pay a court fee and deposit totalling £510.

You will remain liable to pay certain debts – in particular student loans, fines and some debts arising from family proceedings.

Any business you have will almost certainly be closed down.

Your employment may be affected.

Certain professionals are barred from practising if they are made bankrupt.

You cannot act as a director of a company or be involved in its management unless the court agrees.

You will be committing an offence if you get credit of £500 or more without disclosing that you are bankrupt.

You may have a bankruptcy restrictions order

* Made against you for 2 to 15 years if you acted irresponsibly, recklessly or dishonestly.

* An order that will place restrictions similar to those in force while a person is bankrupt, which the official receiver may apply for.