Skip to main content
Declaring bankruptcy in the UK - courthouse and scales of justice

Declaring Bankruptcy in the UK: What You Need to Know in 2026

Updated for 2026

If you are thinking about declaring bankruptcy, you are not alone. Thousands of people across England and Wales take this step every year when debts become unmanageable. Declaring bankruptcy can provide a fresh start by writing off most unsecured debts, but it is a serious legal process with lasting consequences. This guide explains how it works, what it costs, and what alternatives you should consider before making your decision.

What Does Declaring Bankruptcy Mean?

Declaring bankruptcy is a formal insolvency process in England and Wales. When you go bankrupt, an Official Receiver takes control of your financial affairs. Most unsecured debts are written off, and you are usually discharged after 12 months. During that time, there are restrictions on borrowing, certain employment roles, and business activities.

Bankruptcy only covers England and Wales. Scotland has its own equivalent called sequestration, and Northern Ireland has separate rules too. If you live in England or Wales and owe at least £5,000 in unsecured debt, you can apply online through the GOV.UK bankruptcy service.

The process begins with an online application to the Insolvency Service. You will need to provide full details of your income, expenses, assets, and debts. A judge or adjudicator reviews the application and, if approved, a bankruptcy order is made.

How Much Does Declaring Bankruptcy Cost?

The total cost of declaring bankruptcy in 2026 is £680. This breaks down as:

  • £130 court fee
  • £550 deposit to the Insolvency Service

You can pay the £550 deposit in instalments before submitting your application, which makes it more manageable if money is tight. The court fee must be paid when you apply. If you cannot afford the fee, some free debt advice services may be able to help you explore your options.

It is worth comparing this cost against the alternatives. An Individual Voluntary Arrangement (IVA) or Debt Relief Order (DRO) may cost less upfront, depending on your circumstances.

What Happens After Declaring Bankruptcy?

Once a bankruptcy order is made, several things happen:

  • An Official Receiver is appointed to manage your case
  • Most creditors must stop chasing you for payment
  • Your assets are reviewed, and some may be sold to repay creditors
  • Your name is added to the Individual Insolvency Register, which is a public record
  • If you have surplus income, you may be asked to make payments through an Income Payment Agreement (IPA) for up to three years

Your home is one of the most significant assets at risk. If you own property, the Official Receiver may seek to sell it or claim your share of the equity. However, your essential household items and tools needed for work are normally protected. Read more about bankruptcy and your property.

You will also need to cooperate fully with the Official Receiver. Failing to do so can result in a Bankruptcy Restrictions Order, which extends your restrictions beyond the standard 12 months.

How Long Does Bankruptcy Last?

Most people are discharged from bankruptcy after 12 months. Discharge means you are released from most of your debts and the restrictions that come with being bankrupt. However, some debts are not included in bankruptcy:

  • Student loans
  • Court fines
  • Child maintenance arrears
  • Debts arising from fraud

After discharge, the record of your bankruptcy stays on your credit file for six years from the date of the bankruptcy order. This can affect your ability to get credit, mortgages, or certain types of employment during that period.

Declaring Bankruptcy: The Restrictions

While you are bankrupt, you face a number of restrictions. These include:

  • You cannot borrow more than £500 without telling the lender you are bankrupt
  • You cannot act as a company director without court permission
  • You cannot manage a business under a different name from the one in which you were made bankrupt
  • Certain professional roles in law, finance, and the public sector may be affected

These bankruptcy restrictions are serious, but they are temporary. Once discharged, most restrictions are lifted. For full details on what you can and cannot do, visit the GOV.UK bankruptcy restrictions page.

Alternatives to Declaring Bankruptcy

Bankruptcy is not the only option for dealing with problem debt. Before you apply, consider whether one of these alternatives to bankruptcy might suit you better:

Individual Voluntary Arrangement (IVA)

An IVA is a formal agreement between you and your creditors to repay a portion of your debts over a set period, usually five or six years. You make affordable monthly payments, and at the end of the arrangement, remaining debts are written off. An IVA requires the agreement of creditors holding at least 75% of your debt by value.

Debt Relief Order (DRO)

A DRO is designed for people with low income, few assets, and debts under £30,000. It costs £90 and lasts for 12 months. If your circumstances have not improved after that period, your debts are written off. You apply through an authorised debt adviser, not directly.

Debt Management Plan (DMP)

A DMP is an informal arrangement where you make reduced monthly payments to your creditors. It is not legally binding, which means creditors can still chase you, but it can be a good option if your debts are manageable with lower payments. Many free debt charities such as StepChange offer DMP services at no cost.

County Court Administration Order (CCAO)

If you owe less than £5,000 and have at least one County Court Judgment (CCJ) against you, you can apply for a County Court Administration Order. The court sets a monthly payment based on what you can afford, and your creditors receive a share. This is a less well-known option but can be useful for smaller debts.

Who Can Help With Declaring Bankruptcy?

You do not need to go through this alone. Several organisations provide free, confidential debt advice across the UK:

Speaking to an adviser before declaring bankruptcy is strongly recommended. They can review your full financial situation and help you understand which option gives you the best outcome. You can also read our bankruptcy guides for detailed information on every aspect of the process.

Is Declaring Bankruptcy Right for You?

Declaring bankruptcy may be the right choice if:

  • You owe significant unsecured debts that you cannot realistically repay
  • You have no valuable assets or property equity at risk
  • You want a defined end point, with most debts cleared after 12 months
  • You have explored alternatives and none are suitable for your situation

It may not be the best choice if you own a home with equity, work in a profession with restrictions on bankrupts, or have debts that bankruptcy would not cover.

Every person’s situation is different. Getting professional advice before making this decision is the most important step you can take. Our team can help you understand your options at no cost.

Important: The information on this page is for general guidance only and does not constitute financial or legal advice. Bankruptcy laws and thresholds can change. Always seek professional advice tailored to your individual circumstances before making any decisions about declaring bankruptcy or other debt solutions.

Get Free Help With Your Debt

Not sure whether declaring bankruptcy is right for you? Speak to our team for free, confidential guidance on all your options, including IVAs, DROs, and debt management plans.

Request a Free Callback