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Checklist - is bankruptcy right for you?

This advice applies to Wales

Bankruptcy may help you become free of debts but it isn't the right option for everyone. It's important to understand how it will affect your day-to-day life and to explore the alternatives.

This page has a checklist to help you decide whether bankruptcy might be right for you.

Bankruptcy explained

If you want more information about what bankruptcy is and how it works, see Bankruptcy - what you need to know.

When bankruptcy may be right for you

Bankruptcy may be suitable for you if all of the following apply:

  • you can't see a way to pay your debts
  • you don't have many belongings of value and there's little or no equity in your home
  • it's unlikely that your situation will improve
  • you live or carry out a business in England or Wales, or have done so at any point in the last 3 years and live permanently in another European state (apart from Denmark)

There isn't a minimum amount of debt you need to be eligible. If the value of your unsecured debts is higher than the value of the things of value that you own, then bankruptcy may be worth considering. Unsecured debts include things like credit cards, personal loans and store cards.

When bankruptcy may not be right for you

Bankruptcy may not be suitable for you if any of the following apply:

  • you owe less than £20,000 and any belongings you own (other than basic household goods and a vehicle worth less than £1,000) are not worth more than £1,000 in total - you might want to consider a debt relief order
  • you work in certain occupations such as solicitor, accountant or estate agent, as your professional association may bar bankrupt people from membership
  • you don't want your debt problems to be public
  • your circumstances might change in the near future - for example, if you're going to inherit money or claim money because you were mis-sold payment protection insurance (PPI), it might be better to use this to deal with your debts
  • you have access to a pension pot that's bigger than your debt - you might not be allowed to become bankrupt

Top tip

If you're considering bankruptcy, you'll need expert advice. Contact your nearest Citizens Advice for advice about your debt problems and bankruptcy.

Other things to think about

Going bankrupt may have a big impact on your life, so it's important you think about how it will affect you.

Can you afford it?

Going bankrupt will usually cost £680. You need to make sure you can afford to go bankrupt.

Your home

If you own your home, it may be sold, with the proceeds used to paying your creditors.

If you rent your home, you're unlikely to lose it unless your tenancy agreement says that you can't rent the home if you're bankrupt. You may find it harder to find a new home to rent.

Access to credit

Bankruptcy will have a serious impact on your credit rating. This could make running a business, getting a mortgage or getting other credit very difficult for a long time.


If you own any belongings, apart from basic household goods and things you need for work, they may be sold, with the proceeds used towards paying your creditors.

Restrictions on your job

After you've been declared bankrupt but before you've been discharged from bankruptcy, you have to follow certain restrictions to do with your working life and finances.

Do you have a plan for your debts not covered by bankruptcy?

While bankruptcy will clear many types of debt, there are some that are excluded, including magistrates court fines and student loans. If you owe any debts that are excluded, the people you owe these debts to can continue to chase you and take action to get their money back during your bankruptcy period. You therefore need to make sure you know which debts your bankruptcy won't cover and work out how you'll pay them back.

Bankruptcy will be public knowledge

If you go bankrupt, it will be recorded in public records that anyone can access. If you, or a member of your family that you live with, would be at risk of violence if your details were published, you can ask the court to order that this doesn't happen.

Are you applying for British citizenship?

Being declared bankrupt would mean any application you make for British citizenship or to bring dependants to this country would be likely to fail.

Alternatives to bankruptcy

The main alternatives to bankruptcy are:

  • debt relief order: this may be appropriate if your debts total less than £20,000, you have less than £50 a month available to pay your creditors, , you are not a homeowner, and any belongings you own (apart from basic household goods and a vehicle worth less than £1,000) are not worth more than £1,000 in total
  • individual voluntary arrangement: this may be appropriate if you've got at least £100 you could put towards paying your debts each month and want to pay off your debts over a fixed period of time
  • administration order: this may be appropriate if the total of your unsecured debts is less than £5,000 and you've got a county court judgment for debt.

Next steps

More information

'Alternatives to bankruptcy' - from the Insolvency Service at

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