Filing for Bankruptcy in the UK: What Happens Next

What Happens When Someone Files for Bankruptcy?

When someone files for bankruptcy in England and Wales, a formal legal process begins that places their financial affairs under the control of an official receiver. Most people who go through bankruptcy are discharged — meaning their qualifying debts are written off — after 12 months, though the effects on credit and certain assets can last considerably longer.

The process starts with an online application and a fee of £680, paid in full to the Insolvency Service before the application is submitted. There is no court hearing for most personal bankruptcy applications — the adjudicator at the Insolvency Service makes the decision, usually within a few working days. If the application is approved, a bankruptcy order is made and the 12-month period begins immediately.

Step One: Applying for Bankruptcy

The application is made online through GOV.UK. According to the Insolvency Service, the applicant must provide details of their debts, assets, income, and outgoings. The £680 fee covers both the adjudicator's fee and the official receiver's deposit. It can be paid in instalments before submission, but the application is only forwarded once the full amount has been received.

There is no minimum debt level required to apply for bankruptcy in England and Wales, though it is a significant step and other formal debt solutions — such as a Debt Relief Order or an Individual Voluntary Arrangement — may be relevant depending on individual circumstances. A person can apply for their own bankruptcy, or a creditor owed at least £5,000 can petition the court to make someone bankrupt.

What Happens Immediately After a Bankruptcy Order Is Made

The official receiver takes over

Once a bankruptcy order is made, an official receiver — a civil servant and officer of the court — is appointed to administer the case. The official receiver contacts the bankrupt person, usually by letter and sometimes by phone, within a short period of the order being made. They will ask for information about assets, income, and liabilities.

The bankrupt person is legally required to cooperate fully with the official receiver. Failing to do so, or concealing assets or information, can result in the bankruptcy restrictions being extended or additional legal consequences.

Assets may be taken

From the moment the bankruptcy order is made, most of the bankrupt person's assets pass to the official receiver or a licensed insolvency practitioner appointed as trustee. This can include savings, non-essential vehicles, valuable possessions, and — in some cases — a share in a property. According to GOV.UK, tools needed for work and basic household items are generally excluded.

If the bankrupt person owns a home, the official receiver has up to three years from the date of the bankruptcy order to deal with any interest in that property. If no action is taken within that period, the interest reverts to the individual. Where there is equity in the property, the official receiver may apply to the court for a sale — though this depends on the specific circumstances of the case.

Bank accounts and ongoing payments

Many banks will freeze or close a current account when they are notified of a bankruptcy order. The official receiver will advise on what to do next. Some banks offer basic accounts to people who are bankrupt, and the official receiver can help identify options. Any income paid into an account may be reviewed as part of an Income Payments Agreement or Income Payments Order (see below).

Income Payments During Bankruptcy

If the bankrupt person has income above what is considered necessary for reasonable domestic needs, the official receiver can ask them to make contributions from that surplus income. This arrangement is called an Income Payments Agreement (IPA) if agreed voluntarily, or an Income Payments Order (IPO) if the court orders it.

An IPA or IPO can last for up to three years from the date it is put in place — which means payments can continue for up to two years after the person has been discharged from bankruptcy. The amount is based on a detailed assessment of income and essential expenditure.

People whose only income is state benefits are generally not subject to an IPA or IPO, as benefits are excluded from the calculation. The official receiver will confirm the position based on the individual's circumstances.

Bankruptcy Restrictions: What Cannot Be Done During Bankruptcy

While bankrupt, a person faces a number of legal restrictions under the Insolvency Act 1986. According to GOV.UK, these include:

• Borrowing more than £500 without telling the lender about the bankruptcy
• Acting as a company director without court permission
• Being involved in the formation, promotion, or management of a limited company without court permission
• Practising in certain regulated professions (rules vary by profession)
• Acting as an insolvency practitioner

These restrictions apply for the full 12 months of the bankruptcy period, until discharge. Breaking them is a criminal offence. Some restrictions can be extended beyond 12 months if the official receiver finds evidence of dishonest or reckless behaviour — this is known as a Bankruptcy Restrictions Order (BRO) or Bankruptcy Restrictions Undertaking (BRU), and can last between 2 and 15 years.

Discharge: When Does Bankruptcy End?

In most straightforward cases, bankruptcy in England and Wales ends automatically after 12 months. At the point of discharge, the bankrupt person is released from most of the debts that existed at the time the bankruptcy order was made. The discharge happens automatically — there is no application required.

However, discharge does not mean everything returns to normal immediately. The bankruptcy will appear on the individual's credit file for six years from the date the order was made, which typically affects the ability to obtain credit, mortgages, and some rental agreements during that period.

The bankruptcy will also be recorded permanently on the Individual Insolvency Register, which is a public register maintained by the Insolvency Service. The record is removed from the public register three months after discharge in straightforward cases, though it remains accessible through other official records.

How Bankruptcy Affects a Credit File

A bankruptcy order is recorded with the main UK credit reference agencies — Experian, Equifax, and TransUnion — and will remain on a credit file for six years from the date of the order. During this time, it is likely to affect applications for credit cards, loans, mobile phone contracts, and mortgages. Some landlords and employers also carry out credit checks.

After the six-year period, the bankruptcy entry is removed from the credit file. Many people find that their credit profile gradually improves as they demonstrate responsible financial behaviour in the years following discharge. There is no single timeline for rebuilding credit — it depends on individual circumstances and the lending criteria of each provider.

Common Questions About Filing for Bankruptcy

Can someone keep their car if they go bankrupt?

It depends on the value of the vehicle and whether it is needed for work. The official receiver may allow a person to keep a low-value car, particularly if it is essential for employment. If the vehicle is considered a significant asset, the official receiver may require it to be sold. Each case is assessed individually by the official receiver or trustee.

Does bankruptcy affect a spouse or partner?

Bankruptcy applies to the individual who is made bankrupt, not their spouse or partner automatically. However, jointly held assets — such as a jointly owned home or joint bank accounts — can be affected. If the bankrupt person has a beneficial interest in a jointly owned property, the official receiver will consider that share as part of the estate. A partner's own separate debts and credit file are not directly affected by the other person's bankruptcy.

What is the difference between bankruptcy and a Debt Relief Order?

Both are formal insolvency procedures in England and Wales that can result in debts being written off after 12 months. A Debt Relief Order (DRO) is designed for people with lower levels of debt — the qualifying debt limit is currently £50,000 — lower assets, and lower surplus income. There is no application fee for a DRO (the £90 fee was abolished on 6 April 2024), whereas bankruptcy costs £680 to apply. The eligibility criteria differ significantly, and a regulated debt adviser can explain which route may be relevant to a particular situation.

Can someone apply for bankruptcy if they own a business?

A self-employed person or sole trader can apply for bankruptcy. The business assets will generally form part of the bankruptcy estate and may be used to repay creditors. The individual cannot continue to trade under the same business name as the bankrupt individual without disclosing the bankruptcy to those they deal with. Limited company directors face a separate set of rules, and acting as a director while bankrupt requires court permission. A regulated insolvency practitioner or debt adviser can explain the options relevant to business-related insolvency.