Write off unaffordable unsecured debt

What is bankruptcy?

Also know as Sequestration, it's a legal process that writes off the unsecured debt you can't afford to repay on completion, normally after a year - although you may have to make affordable payments towards your debt for up to four years.

Prevents further action from lenders

You'll get legal protection from your lenders as soon as your bankruptcy has started.

Writes off unaffordable unsecured debt

You won't have to repay any debt you can't afford to - or make monthly payments if you can't afford them. If you're a homeowner, though, bankruptcy could cost you your home.

Makes room for your other living costs

You won't have to pay your lenders any money you need for things like food and utility bills every month. Bear in mind that bankruptcy's a serious step, with long-lasting consequences.

Find out if bankruptcy might be right for you with our Solution Finder - or call us for some advice on 0800 505 3848.

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Frequently asked Bankruptcy questions

How does bankruptcy work?
How do I know if I qualify for bankruptcy?
Will I lose my home if I go bankrupt?
What does bankruptcy cost?
What if I don't qualify for bankruptcy?
What are the disadvantages of bankruptcy?

Could Bankruptcy help me?

Bankruptcy is a form of insolvency. If you can't afford to repay your debts within a reasonable amount of time, bankruptcy might be the best way to put them behind you so you can move on.

That's especially true if you have a low / irregular income and you don't think your situation is going to get any better. One of the best things about bankruptcy is you won't have to make any monthly payments if you can't afford to.

Just remember that bankruptcy is a 'last resort' - and it won't even be an option if you can't show that you are insolvent.

If you're not sure about the best way to tackle your debts, you can call us on 0800 505 3848. One of our advisors will be able to tell you if bankruptcy really is right for you.

How bankruptcy works

If you're declared bankrupt, your unsecured debts will be written off on successful completion, which normally comes after a year. You'll then be completely free of the debts covered by the agreement.

However, it also means some of your possessions (your home, for example, or your car) can be sold off so your lenders can get back some of the money they're owed.

If you enter bankruptcy, you'll be protected against your lenders while it's in progress - and you'll probably be 'discharged' from bankruptcy after one year (although there are some exceptions, depending on your past conduct).

If you can afford to do so, you will normally have to make monthly contributions towards your debts for up to four years, based on what you can afford alongside your other living costs. You will make this payment to an IP (Insolvency Practitioner) each month. We have in-house IPs who will look after your case and will do what they can to ensure your payment plan runs smoothly.

Downsides of bankruptcy

There are quite a few downsides to bankruptcy. Here are some of the ones that might concern you.

Your assets can be sold off so your lenders can be paid some of the money they're owed. You also won't be able to hold certain jobs if you've been declared bankrupt.

Your bankruptcy will be recorded on the Register of Insolvencies, which is publicly available.

Bankruptcy can affect your employment opportunities, in that it prevents you holding certain positions, such as a company director.

And your bankruptcy will stay on your credit report for six years, meaning you may find it difficult to obtain credit during this time. If you try to borrow more than £2000, you must also tell the lender you have been made bankrupt.

Bankruptcy advice

Can I still work if I go bankrupt?

The chances are entering bankruptcy won't mean you lose your job. But, it does depend on your individual circumstances and the type of job you have.

What restrictions are there after bankruptcy in Scotland?

Bankruptcy could help you clear your problem debts and let you start with a financial 'clean slate' but there are also some drawbacks. You may be under certain restrictions even after you're discharged from bankruptcy in Scotland.

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