How much debt do you need to go bankrupt?

If you have unsecured debts that you simply cannot afford to repay in any kind of timeframe, bankruptcy could be the best approach to take.

There are two ways you could enter bankruptcy:

1. By applying to go bankrupt yourself
2. By being petitioned for bankruptcy by your lenders.

You can find more bankruptcy advice on this page.

There is no actual minimum amount of debt you need to have in order to apply for bankruptcy yourself in England, Wales and Northern Ireland. However, as it's a serious process with serious consequences, it's important that you've considered all other approaches first. Plus, the court could dismiss the petition if it doesn't believe that bankruptcy is appropriate in your case.

On the other hand, if a lender wants to petition for your bankruptcy, you must owe them £750 or more for them to be able to do this.

In Scotland, however, the rules are different. If you decide you want to make yourself bankrupt, you must owe a total of £1,500 or more. Also, your lenders could only petition for your bankruptcy if you owe at least £3,000.

How much does bankruptcy cost?

If you petition for your own bankruptcy in England, Wales or Northern Ireland, the total cost is £700 - a £525 administration fee plus a £175 court fee (the court fee can be waived in some cases).

In Scotland, on the other hand, the application fee for bankruptcy is £200.

We offer more expert debt help and advice on this page.

How could bankruptcy help you?

Bankruptcy is a formal insolvency approach designed to help borrowers with very serious debt problems.

Once the court has issued a bankruptcy order, your 'estate' - that is, anything you own, such as your home if you're a homeowner and your non-essential possessions - will be signed over to the Official Receiver (or Trustee, if you're a Scottish resident). Any of those assets may be sold during your bankruptcy, and the funds raised will be used to repay your lenders.

A typical bankruptcy lasts for 12 months, although you may have to make payments of whatever you can afford for up to three years. While your bankruptcy is ongoing, you'll be protected from any further action from your lenders - and once you're successfully discharged, any debt included that you can't afford to repay will be written off, so you can put your unsecured debt problems behind you.

Bear in mind that bankruptcy will remain on your credit file for six years and can stop you working in certain jobs.

You should contact a debt professional to discuss your options.

Relates resources:

• Bankruptcy Laws in England and Wales
• Bankruptcy v IVA - Which is better?
• Direct.gov
• LILA - the Low Income Low Asset route to bankruptcy

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Tags: debt, bankruptcy, bankrupt, advice, Scotland, Ireland, England, insolvency, Official Receiver, Law

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