Learn about Bankruptcy

What are the disadvantages of Bankruptcy?

Although having your debts cleared by declaring yourself bankrupt would be a great stress relief, there are also some serious downsides to it that you should know of before you consider Bankruptcy.

1. Additional costs

Declaring yourself bankrupt is not free. You should expect to pay at least £700.

2. Bad credit

You will be unable to apply for credit during the first 12 months of Bankruptcy. After that, you will be able to apply for it, but you might find it hard to get accepted.

3. Assets may be taken

Your house may be taken from you and sold to recover some of the money you owe. Find out more.

Some of your other assets are also at risk and may need to be sold. Find out more.

4. Lack of privacy

Bankruptcy cannot be kept private. Your details will be placed on the Insolvency Register which is accessible online. In some cases, details of your Bankruptcy may also be published in your local newspaper.

5. Not all debts will be cleared

Not all of your debt will be written off. For example, debts associated with Student Loans, Court Fines and Child Maintenance Costs won't be written off and you will still be required to pay them back.

6. Employment opportunities will be compromised

Your employment opportunities will be restricted - there are some jobs that you just can't do if you've been declared Bankrupt. For example, you can't have a job as a solicitor, trustee of a charity or a role regulated by the FSA. You may even have to give up your current job.

If you're a business owner, it's likely that the Official Receiver will force your business to be closed down, and any current employees you have will lose their jobs.

Alternatives to bankruptcy

Bankruptcy is a very serious option, so have a look at our guides to IVAs, Trust Deeds, Debt Management Plans and Debt Relief Orders to see if you can find a more suitable alternative.