The provisions regarding personal bankruptcy in England and Wales are regulated by the Insolvency Act 1986. In Scotland, the bankruptcy procedure is entirely different, and a separate bankruptcy petition is filed with AiB (Accountant in Bankruptcy). On this website, we will discuss only the bankruptcy procedure in England and Wales, although our company has also conducted many bankruptcies in Scotland.


How does the personal bankruptcy procedure work?

  • It relieves you of overwhelming debts, providing an opportunity for a fresh start (with certain, sometimes costly, consequences).
  • Fairly distributes your assets among creditors. Of course, only if you have any assets. If you don’t have any assets, you don’t lose anything.

Anyone employed, self-employed, or in a partnership can become bankrupt. If your debts are genuinely high and you see no way to repay them, you should consider filing for bankruptcy. An exception applies to individuals who own a Ltd company or are members of its board. Such individuals CANNOT DECLARE BANKRUPTCY.

Benefits of filing for personal bankruptcy:

You will be relieved of all debts except for:

  • maintenance payments
  • court fines imposed by Magistrate Courts
  • student loans
  • overpaid or fraudulently obtained state benefits
  • criminal fines issued by the police

Consequences of personal bankruptcy:

  • All your valuable possessions may be sold, including your home, car, and other valuable items.
  • Your bankruptcy will be announced in local newspapers and in the “London Gazette.”
  • When applying for credit exceeding £500, you must inform the lender that you are subject to personal bankruptcy proceedings.
  • Obtaining employment in certain professions (related to finance) will be difficult.
  • You will not be able to be an owner or partner in a Ltd company without court permission.
  • You cannot change the name of your business that you used before filing for personal bankruptcy. If you do, you must inform your customers about your personal bankruptcy.
  • Your bank accounts may be frozen. If your income is deposited into any of them, you will need to contact the bank to unfreeze them. After obtaining a decision on personal bankruptcy, you can open a basic account with another bank.
  • If you have a steady job and your monthly income significantly exceeds your monthly expenses, the Official Receiver may propose an Income Payment Agreement (IPA) to you. It is a “proposal you can’t refuse,” involving payments to the Official Receiver of the aforementioned surplus for 3 years from the date of personal bankruptcy.
  • If you have a life insurance policy, the Official Receiver has the right to assign it, and unfortunately, if something happens to you during the restriction period, a portion of the compensation will be used to pay off your obligations.

All the above-mentioned restrictions (except IPA) last for 12 months from the date of receiving the bankruptcy judgment. They then simply disappear, and you are no longer listed in the official bankruptcy register. Unfortunately, a notation of your bankruptcy will be visible for 6 years in unreliable debtor registers (Experian, Equifax, and TransUnion), and your credit score will be low. All the restrictions mentioned above may seem burdensome to the bankrupt individual. However, an experienced Debt Adviser can mitigate them to the fullest extent using their knowledge and experience. An IPA can also be shortened or terminated. Additionally, the Official Receiver has the right to shorten or extend the restriction period. This also depends on the bankrupt individual’s conduct during this period and the experience of the professional assisting them.

Costs associated with filing for personal bankruptcy:

  • Court fee of £680, payable by card or through a bank transfer to the court’s account.
  • Our legal services fee. It is £1200, which includes preparing the petition, filing it, and providing full legal assistance during the bankruptcy proceedings.