How to go bankrupt
If you’ve decided that bankruptcy is the right option for you, this guide will talk you through the bankruptcy process from application to discharge.
Step 1: make sure bankruptcy is right for you
Bankruptcy is not something to be undertaken lightly. It can offer you a fresh start but it can also have serious implications for your everyday life.
Before going ahead, do your research and get debt advice to make sure filing for bankruptcy the right option for you.
Step 2: fill in the online application
If you’ve decided that bankruptcy is the best way to deal with your debts, you’ll need to fill in the online application form.
The form is split into eight sections, so it may take some time to complete. Don’t worry – you don’t need to finish it in one sitting. You can save your progress, take a break and come back later.
You have to complete the sections in order. In other words, you can’t move onto section two until you’ve completed section one.
You’ll need details of your income, living expenses and debts. So, before you begin, it’s a good idea to gather together documents like:
- wage slips
- benefits or pension statements
- bills
- letters from bailiffs
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Step 3: pay the fee
You need to pay the Insolvency Service £680 to apply for bankruptcy.
If you pay online, you can pay in instalments. The minimum amount for an instalment is £5.
It’s important you don’t use a credit card to pay the fee, as this could result in your application being refused.
If you don’t want to pay online, you can pay in full in cash at a bank. You’ll be told which bank to use when you fill in the form.
You won’t be able to submit your application until you’ve paid the fee in full.
Step 4: withdraw money for living costs
When your bankruptcy order is made, your bank accounts may be frozen straight away. This means you won’t be able to access the money in those accounts.
Before you submit your bankruptcy application, take out enough money to cover your costs for the next few weeks.
Step 5: submit the application
Once you’re paid the bankruptcy fee, you’ll be able to submit your application form. This is known as filing for bankruptcy.
You’ll be asked to confirm:
- you’re the person named on the form
- the information you’ve given is accurate
- you’re happy for a credit check to be carried out
It’s a criminal offence to deliberately mislead the Insolvency Service about your situation. If you do this, you could be fined or sent to prison.
Step 6: adjudicator’s decision
The adjudicator will either reject your application or make a bankruptcy order. They have 28 days to make their decision.
If they need any additional information from you, they’ll be in touch. They’ll then have an extra 14 days to make their decision.
If they reject your application, they’ll send you a notice of refusal. You’ll also get a refund of £550 (£130 will be kept for the adjudicator’s fee).
If you disagree with the decision, you can ask for it to be reviewed.
If the review doesn’t go in your favour, you can appeal to the court using an N161 form.
Step 7: being declared bankrupt
If your bankruptcy application is accepted, a bankruptcy order will be made and you’ll officially be declared bankrupt.
Your bank accounts will usually be frozen straight away.
Step 8: dealing with the official receiver
Once you’re declared bankrupt, your money and property will come under the control of the official receiver. They’ll be in touch with you within two weeks of the bankruptcy order being made to arrange an interview. This will usually take place over the phone.
The official receiver will make sure your money and property is distributed among the people you’re indebted to. You need to cooperate with the official receiver to make sure they can do their job.
During your bankruptcy, you should tell the official receiver if:
- your income changes
- you receive any assets e.g. a vehicle or a property
- you receive a windfall e.g. inheritance, lottery win, unexpected bonus, compensation, life insurance payout
Step 9: open a bank account
If your bank accounts have been frozen, you may need to open a new one to have your wages and/or benefits paid into.
You may find it difficult to open some bank accounts but you should be able to open a basic bank account.
Sometimes, the official receiver and your bank may allow you to carry on using an existing account.
Step 10: discharge from bankruptcy
After a year of your bankruptcy order being made, you’ll usually be discharged from bankruptcy.
This releases you from any debts covered by your bankruptcy and removes the bankruptcy restrictions (unless a bankruptcy restrictions order/undertaking has been made).