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Top 5 Surprising Things You Need To Know About Bankruptcy

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By Author: Darren Burgess
Total Articles: 18
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If you’re standing on the cusp of bankruptcy there are two things that are almost certain: 1. You feel lonely and isolated. And 2. You’ve undoubtedly done your research and by this point have read what feels like hundreds of guides. Yet among all your reading on bankruptcy debt, there remains five things that you probably didn’t know…

1. There are more people than you may realise who declare bankruptcy

UK insolvencies are currently running at a six-year high (‘insolvencies’ include debt solutions such as IVAs and Debt Management Plans, as well as bankruptcies).

2. Bankruptcy isn’t the same process throughout the UK

Bankruptcy works differently if you live in Scotland. In Scotland, bankruptcy is instead known as Sequestration or Minimal Assets Process (MAP) bankruptcy. However both solutions have different benefits, risks and fees.

Sequestration is the Scottish equivalent to bankruptcy and provides a debt solution when you are unable to reasonably afford to repay your debts. To be eligible for Sequestration you must:

- Have debts of above £3,000
- Live in Scotland and have lived there for a minimum of the past 12 months
- You must not have been declared bankrupt in the past five years

MAP bankruptcy is designed for those who have less than £1,000 in assets and who have a low income. MAP bankruptcies replaced LILA bankruptcies. MAP bankruptcies are only suited where there are debts of between £1,500 and £17,000.

3. Going bankrupt isn’t cheap

Yes, you heard that right – bankruptcy isn’t free. In fact, the fees total to £680 - £130 of which is an application fee, while the bankruptcy deposit is £550 (and that’s before you factor in any legal advice, should you need it).

The good news is that you can arrange to pay this in instalments if you’re unable to meet the fee all in one go.

4. There are numerous rules that you must follow during bankruptcy

Bankruptcy typically lasts for 12 months, over which time you must adhere to the following rules by law. You must not:

- Borrow more than £500 from a lender without telling them you’re bankrupt
- Be a company director
- Buy a council house using the ‘Right to Buy’ scheme
- Change the name of your business if you’re self-employed
- Leave the country without permission if you live in Northern Ireland

Should you break any of these rules before you’re ‘discharged’ (the official time you are ‘released’ from your debts), you may face prosecution, which could lead to a fine or even imprisonment.

You should also bear in mind that if your bankruptcy was caused by dishonest or reckless behaviour, the official receiver (or the Accountant in Bankruptcy if you’re using a bankruptcy solution in Scotland), can extend these restrictions using a (BRU) or order (BRO). This extension could last for anywhere between two to 15 years.

5. Bankruptcy is a matter of public record

Bankruptcy is a form of insolvency, and like all insolvency solutions is recorded on something called the Bankruptcy and Insolvency Register. This register is online and open for anyone to search.

If you’re worried about this aspect of becoming insolvent, don’t be. It’s only celebrities that tend to attract the attention of press nowadays (compared to yesteryear, when all bankrupts were routinely printed in the local paper). In short, someone will only be able to find your bankruptcy details if they know what they’re looking for.


If you’re considering bankruptcy our best advice is to do as much research as possible, as bankruptcy may not be your only option. Debt solutions such as an Individual Voluntary Arrangement may be better suited to your needs.

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