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How Bankruptcy works

How to declare Bankruptcy

When you’re in a position where you can no longer afford to repay your debts, we understand how stressful and worrying this time can be.

We will carry out an initial assessment to ensure this is the right solution for you and to find out if your debt problems could be resolved with an alternative debt solution such as a Debt Management Plan or an IVA.

For some people Bankruptcy is their only option. We provide a Bankruptcy Support Service and can guide you through the process so that you can start living your life free from debt once again.

Three steps of Bankruptcy

Click the steps below to find out more


Complete a Bankruptcy petition:
Once you have completed the Bankruptcy petition and have sent it to the courts for approval, a date will be set for an initial court hearing. This hearing will determine whether a Bankruptcy Order will be made or not. If a Bankruptcy Order is granted, you will then be declared Bankrupt.


Bankruptcy fees
You will have to pay Bankruptcy fees in order to go Bankrupt.

Court fees:
– £180 (depending on your financial situation)

Official Receiver Deposit:
– £525

Couples applying for Bankruptcy will each have to pay separate fees.

Our Bankruptcy Support Service will guide you through this process and ensure all paperwork has been completed correctly and on time. The service fee for providing this service is £450 for new customers, £675 for couples or in some cases, free to existing Baines & Ernst customers. You will have the option to pay this fee in instalments to make it easier for you to afford.


Your assets are passed to a Trustee:
You will be appointed an Insolvency Practitioner or Official Receiver who will act as your Trustee during the Bankruptcy process. They will take control of valuable assets including your home, and will make arrangements for these to be sold and payment to be made to your lenders. The Trustee will also deal with your lenders on your behalf, so you will not have to speak to them regarding your debts.

  • Could be free from debts in 12 months
  • Reduce pressure caused by debts
  • Protection from lenders

Bankruptcy: What you need to know

Debts that can be included in Bankruptcy

Only unsecured debts can be included in Bankruptcy, this means debts that are not secured against your property or something you own.

Included in Bankruptcy:

  • Personal loans
  • Payday loans
  • Store cards
  • Credit cards
  • Catalogue accounts
  • Bank overdrafts

In some circumstances…

  • Rent arrears (from previous properties or current housing association property)
  • Mortgage arrears
  • Council Tax Arrears from previous properties
  • Last year or the previous year’s Council Tax from current property

Excluded from Bankruptcy:

  • Mortgage repayments
  • Social funds and crisis loans
  • Hire purchase loans (e.g. car loans)
  • Secured loans
  • Utility bills
  • Student loans
  • Child maintenance
  • TV licence

Your home and assets

Bankruptcy is considered to be one of the most severe ways to clear debts because you could lose your home, car and valuable assets. These will often be sold to help repay your lenders.

If you have children living at home, you will normally be given up to 12 months to find suitable alternative accommodation.

Credit rating

Although you will normally be discharged from Bankruptcy after 12 months, your Bankruptcy Order will be registered with the Credit Reference Agency and will remain on your file for 6 years after completion. This will affect your credit rating and ability to secure credit in the future.

Even after this time, you may still have to declare that you were bankrupt – especially if you’re applying for a mortgage. Ultimately, you will have to re-build your credit rating over a number of years.

The Trustee

Once you have been declared Bankrupt, you will be appointed a Trustee who will take control of all of your assets such as your home and car and will arrange for these items to be sold to help repay your lenders. If you have any concerns, you can speak directly to your trustee. What’s more, your Trustee will take care of all the arrangements – so you never need to talk to your lenders again.

Monthly contributions

Depending on your earnings, your Trustee may require you to make contributions to your lenders out of your income. The amount that is paid to lenders is determined by the amount that you can reasonably afford after your normal living costs have been deducted from your income. This is called an Income Payments Order (IPO), and if applicable, it will remain in force for three years from the date of Bankruptcy.

Business and career

Bankruptcy can have a big affect on many areas of your life – including your career. For example, if you own a business, you could be asked to close it down to help repay your creditors.

Also, if you work within the financial sector or in certain public offices, your employment could be affected. Always check with your Human Resources department if you’re in doubt.


There are certain times when you will need to tell people that you have been made Bankrupt. For example, you will have to declare that you have been made bankrupt when opening a bank or building society account, or if you apply for a mortgage.

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  • Total unsecured debt: £500

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Find the right solution

Answer a few simple questions and we'll help you find your solution.
  • Total unsecured debt: £500

  • This field is for validation purposes and should be left unchanged.

Debt advice you
can trust...

Debt Advice You Can Trust
We are committed to providing the highest standard of service to our customers and helping them find their way out of debt with the most appropriate debt solution.

Money Advice Service

You can get free debt advice from the Money Advice Service – an organisation set up by the Government to offer free and impartial advice to those in debt. Click here for more information.