3. What is involved in going bankrupt?

Bankruptcy is an option if you have large debts that you cannot afford to repay over a reasonable period of time. If you go bankrupt a government agency called the Official Receiver becomes responsible for controlling your financial affairs. It may ask you to make payments to your creditors at a level you can afford for up to three years.

You can be made bankrupt by your creditors or you can apply to be made bankrupt yourself (called ‘petitioning for bankruptcy’).

Bankruptcy is not an easy option. You should get expert advice before applying to make yourself bankrupt, because other ways of dealing with debts may be better for you. Bankruptcy is normally the right option when you have large debts that will take many years to repay. It may not be suitable if you:

• have a certain type of job (for example, if you work in finance or you are a solicitor), because you will not be able to do those jobs;
• own (or are buying) your own home because you could lose it;
• have other assets (which you could lose); or
• are likely to inherit money or goods during the bankruptcy period, because you may not be able to keep it.

And there are some types of debt you will still have to pay after bankruptcy:

• magistrates’ fines;
• maintenance for a partner or children;
• debts from fraud;
• student loans;
• compensation you owe to another person.

Finally, you must make a lump-sum payment, including:

• £345 for the Official Receiver; and
• £150 court fees.

You can apply to have the court fee waived if you are receiving certain benefits or can’t afford to pay it.

If you need help dealing with bankruptcy or any other aspect of debt, we recommend that you speak to one of our debt advisers on 0845 345 4 345 for specialist advice. Telephone specialist advice is only available if you qualify for legal aid.

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