How do I qualify for bankruptcy?
If you’ve got unmanageable debts and it’s unlikely that you’ll be able to pay these back within a reasonable timeframe, you might consider bankruptcy. With bankruptcy, your debts could be paid off in just 12 months.
It is likely to have some negative consequences for you but it does mean that you can start rebuilding your finances.
But as bankruptcy is a formal insolvency, it’s subject to some quite strict rules. Some of these rules are about who can apply for bankruptcy – only certain people in certain situations will qualify.
Qualifying criteria for bankruptcy
If you owe your creditors at least £5,000, they could petition for your bankruptcy. This means they could force you to go bankrupt.
But if you want to apply for bankruptcy yourself, there’s not a minimum debt level. You’ll just need to show that you wouldn’t be able to repay your debts in a reasonable amount of time.
You’ll also need to have lived in England and Wales for at least six months in the past three years. If you live in Scotland or Northern Ireland, you’ll have to go through your country’s respective bankruptcy process.
You can’t include all debts in bankruptcy – there are some debts that are excluded. These include:
- fraudulent benefit and tax credit overpayments,
- child maintenance arrears,
- court fines,
- student loans,
- personal injury claims made against you, and
- any debts you took out fraudulently.
Bankruptcy isn’t for secured debts– so no mortgages or car hire purchase. If you did include these in your bankruptcy, your lender would take back the property that the debt was secured against e.g. your house or car.
Although bankruptcy can mean you clear your debts in just 12 months, that doesn’t mean it’s suitable for everyone. Read our ‘Is Bankruptcy right for me?’ page to see what you should consider before you apply.Continue to the next section Is bankruptcy right for me?