Bankruptcy: what it is, what it costs and who it suits
A Bankruptcy lasts discharged in 12 months; payments up to 3 years. Here is what you pay, what happens to your home and credit file, and the risks — explained without the sales pitch.
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Checked against the the 2025 IVA Protocol and current government guidance. Figures verified 2026-08-14. See the figures we use.
How it works
Only if you have surplus income. An Income Payments Agreement typically runs for 3 years.. Usually discharged after 12 months, but an Income Payments Agreement or Order can require payments for up to 3 years, and the trustee's interest in your home can last 3 years.
Who it is for
People with no realistic prospect of repaying, who are outside DRO limits — often because of the level of debt, income or assets.
What it costs
£680 to apply in England and Wales, payable up front and in instalments if needed.
What happens to your home
Your beneficial interest passes to the trustee. Your home can be sold, or your share bought out by a family member. The trustee has 3 years to act before the interest usually returns to you.
What it does to your credit file
Recorded for 6 years from the bankruptcy order. Listed on the public Individual Insolvency Register, and in some cases advertised more widely.
Protection from creditors
Creditors cannot pursue included debts once the order is made. Qualifying debts are written off on discharge.
The risks you need to weigh
- Assets including your home and a vehicle above a modest value can be sold.
- Certain professions restrict or prohibit undischarged bankrupts — company directors, some financial services and legal roles, and some regulated occupations.
- It is public, and can be reported.
- You may be subject to a Bankruptcy Restrictions Undertaking of 2 to 15 years if conduct is criticised.
- The £680 fee has to be found first.
How it compares
| Bankruptcy | IVA | DMP | DRO | |
|---|---|---|---|---|
| Formal insolvency | Yes | Yes | No | Yes |
| Where it applies | England, Wales and Northern Ireland (Scotland calls it sequestration) | England, Wales and Northern Ireland | The whole of the UK | England and Wales (Northern Ireland has its own version with different thresholds) |
| Typical duration | Discharged in 12 months; payments up to 3 years | 60 months, or 72 with home equity | Until the debt is repaid — no fixed end | 12 months |
| Monthly payments | Only if you have surplus income | Monthly, affordability-based | Monthly, flexible, changeable | No payments at all |
| Your home | May be sold | Excluded; equity sets the term | Not affected | Not available to homeowners |
| Credit file impact | 6 years from the order | 6 years from the start date | Defaults recorded, 6 years each | 6 years from the order date |
| Public register | Listed on the public Individual Insolvency Register, and in some cases advertised more widely. | Listed on the public Individual Insolvency Register, which anyone can search. Your address can be withheld only on evidenced safety grounds. | Nothing public. A DMP is a private arrangement. | Listed on the public Individual Insolvency Register. |
| Fees | £680 application fee | Paid from your monthly payments | Free providers available | Free — no application fee |
| Creditor protection | Full protection, then discharge | Legally binding on included creditors | None — entirely voluntary | Full protection, then write-off |
Not sure which of these applies to you?
Answer eight questions about your circumstances and see which routes are worth understanding, before you speak to anyone.
Common questions
Will I lose my home?
Possibly, and this is the question to think hardest about. Your beneficial interest in the property passes to the trustee, who has three years to deal with it. If there is meaningful equity, the trustee will look to realise it, which can mean a sale — though a partner or family member buying out your share is common. If there is little or no equity, the interest often returns to you after three years. If you own a home with equity you want to keep, get advice before applying.
Can I be a company director after bankruptcy?
Not while undischarged. It is a criminal offence to act as a director or be involved in the promotion, formation or management of a company while bankrupt, without permission from the court. After discharge the restriction usually lifts, unless you are subject to a Bankruptcy Restrictions Order or Undertaking.
Is £680 really unavoidable?
The fee itself is fixed, but it can be paid in instalments before the application is submitted, and some charities have hardship funds that can help. If you cannot raise it and your debts and assets are within the limits, a Debt Relief Order costs nothing and may achieve the same outcome — which is precisely why the DRO route should be checked first.
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