Bankruptcy is one example of the various types of personal insolvencies. This is usually seen as a last resort when a person cannot repay their outstanding debts of more than £5,000. Although this will eliminate any debts, there's a chance your property will be repossessed and all of your assets may be seized in order to repay any outstanding debt.
You can apply for a bankruptcy yourself, or your creditors can apply to the court and ask for you to be made bankrupt. If you declare yourself bankrupt, you'll have to pay a fee of £680.
Not all debts can be included in a bankruptcy, such as: student loans, magistrate court fines, and child support payments.
You'll be released from your bankruptcy (discharged) after a maximum period of 12 months in England and Wales. But, this period of time can be increased drastically if a bankruptcy restrictions order (BRO) is made against you. A BRO can be issued if you commit a bankruptcy offence, any offences made during bankruptcy will be classed as a criminal offence.
To find out further information on bankruptcy, please visit Citizen's Advice.