Bankruptcy In UK
Bankruptcy is often seen as a last resort, and for many people facing overwhelming debt, it can feel like a frightening word.
May 8, 2025
Bankruptcy In UK
Bankruptcy is often seen as a last resort, and for many people facing overwhelming debt, it can feel like a frightening word. But in truth, bankruptcy is a legal way to wipe the slate clean and get a fresh start as long as you understand the consequences and how it works.
At the Advice Centre Group, we believe in giving you the full picture, without the jargon. So here’s what you need to know before considering bankruptcy.
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Pros and Cons of Bankruptcy
Bankruptcy can offer a clean break from unmanageable debt, but it’s not without its consequences. Below are the main advantages and disadvantages to help you decide whether it’s the right solution for you.
Advantages:
- Bankruptcy allows you to make a fresh start, typically within 12 months.
- All communication and legal action from your creditors must go through the official receiver. This can bring immediate relief from pressure.
- Most debts included in bankruptcy are legally written off, and creditors can no longer take action against you.
- You’ll be allowed to keep enough money to live on, along with essential belongings, including a car worth £1,000 or less if it’s needed for work.
- If you’re self-employed, tools and items necessary for your trade may be protected.
- If you have little or no equity in your home, there’s a possibility you could stay in it.
Disadvantages:
- Bankruptcy will severely affect your credit rating for six years from the date it begins.
- Your bankruptcy will be recorded on the public Insolvency Register.
- Your home may be sold to pay off debts, especially if it holds significant equity.
- You’ll need to pay a fee of £680 to apply for bankruptcy.
- Cars valued over £1,000 are usually sold unless a third party pays the difference.
- Bankruptcy can affect employment in certain professions and restrict you from roles like company director, solicitor, accountant, or financial advisor during the bankruptcy period.
Understanding the real-world impact of bankruptcy is essential. While it can offer powerful relief, it’s a decision that should be made with all the facts—and with the support of a professional adviser.. It’s not one-size-fits-all, and that’s why professional advice is essential.
What Debts Are Included in Bankruptcy?
Bankruptcy typically clears most unsecured debts, including:
- Credit cards
- Personal loans
- Overdrafts
- Payday loans
- Utility arrears
Certain debts aren’t written off in bankruptcy, such as:
- Student loans
- Magistrates’ court fines
- Child maintenance arrears
- Debts from fraud
- Social fund loans
Understanding what debts remain after bankruptcy is crucial for planning your next steps.
Employment and Public Records
Employment Impact Bankruptcy can affect your job if you work in certain professions, such as finance, law, or accountancy. You may be restricted from acting as a company director without the court’s permission.
Insolvency Register Your bankruptcy will be listed on the public Insolvency Register and will remain on your credit file for six years. This can impact your ability to access credit, rent a property, or secure certain types of employment.
Alternatives to Bankruptcy
Before deciding on bankruptcy, it’s essential to consider other debt solutions that might suit your situation better:
Debt Relief Orders (DROs) Designed for people with low income and few assets. It freezes debts for 12 months, after which they may be written off.
Individual Voluntary Arrangements (IVAs) A formal agreement to repay part of your debts over five to six years. It protects you from legal action and can offer more control over your assets.
Each option has its pros and cons, which is why getting expert advice is key.
At Advice Centre Group, we offer confidential, professional debt advice tailored to your circumstances. Whether you’re facing court action, struggling with overdue bills, or simply don’t know where to begin, we’re here to guide you.
We have helped over 11,300+ people improve their financial well-being, with over 1,500 reviews and a 4.9-star rating. If you’re ready to take control of your finances and start fresh, see how an IVA could help you today!
Hear From Karl
It was actually these guys who contacted me, and I am so glad they did! I have gotten myself into a hole and couldn’t see a way out, these have helped me massively, which has helped my mental health. Big shout out to Chris who has guided me through the process from beginning to end, please make sure he gets the credit he deserves.
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Advice Centre Group Ltd registered in England and Wales (14322979). Registered office: Second Floor A, Cheadle Place, Cheadle, Cheshire, England, SK8 2JX.
Adam Southard is authorised as a Licensed Insolvency Practitioner in the United Kingdom by the Insolvency Practitioners Association, We only provide advice after completing or receiving an initial fact find where the individual(s) concerned meet the criteria for one of our insolvency solutions, therefore, all advice regarding Individual Voluntary Arrangements (IVA) is given in reasonable contemplation of an insolvency appointment.
Adam Southard is licensed to act as an Insolvency Practitioner in the UK by the Insolvency Practitioners Association. Office Holder No. 11930
Insolvency Practitioner Directory- Insolvency Practitioner Details (bis.gov.uk)
What you need to know about Individual Voluntary Arrangements
(Insolvency Service)
We provide solutions to individuals throughout the UK, We Will help recommend solutions available to your circumstances in which you can then make an informed decision about which solution you qualify for is best for you and your circumstances.