Can You Go Bankrupt with No Assets in the UK?

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Are you trying to figure out if you can go bankrupt even if you have no assets? You’ve come to the right place. Every month, over 12,000 people seek advice on debt issues on this site.

We understand that being in debt can be tough and scary. You might be worried about not being able to pay your debts and concerned about what might happen if you don’t.

Don’t worry. In this article, we’ll explore:

If it’s possible to go bankrupt in the UK with no assets
What bankruptcy really means
What happens after you’re declared bankrupt
If going bankrupt clears all your debts
The costs of declaring yourself bankrupt

Our team understands your worries because some of us have been in the same boat. We hope to guide you through this tough time and help you make informed decisions about your financial future.

Let’s dive in to understand more about going bankrupt with no assets in the UK.

Do you have to pay?

There are ways to have debt written off in the UK.

If you genuinely can’t afford your debt repayments then looking into whether you could have your payments lowered or written off might be just what you need.

If you want to find out whether you qualify for having debt written off or payments lowered then fill out the short form below.

What is bankruptcy?

Bankruptcy is an insolvency solution and a way to get out of debt when there is no way for you to clear your debts in a reasonable time.

Bankruptcy is certainly a serious debt solution that requires serious consideration, but it often comes with a stigma that it’s not a good idea.

However, for some people in certain situations, declaring yourself bankrupt can be the most sensible decision and the best way out of debt.

Does going bankrupt clear all debts (UK)?

Bankruptcy doesn’t clear all debt. There are some debts that cannot be included in a bankruptcy application, including student loans, court fines and child maintenance arrears.

Moreover, you might still need to keep paying some of your debts during the bankruptcy as part of a payment agreement called an Income Payments Agreement.

And you’re usually required to keep making these repayments for three years after being discharged from bankruptcy.

Can you lower your repayments?

If you’re struggling to pay back your debt, then you might qualify for a debt solution.

Some solutions lower your monthly payments while others write off a portion of your debt.

To find out whether they could work in your situation, hit the button below.

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The different ways to be made bankrupt

You can petition to make yourself bankrupt if you decide it’s the best way to deal with your debt. This is known as voluntary bankruptcy and will be the focus of my post here today.

There are ways that other parties can make you bankrupt as well, such as if you owe a creditor more than £5,000 or if an Individual Voluntary Arrangement (IVA) fails.

How does bankruptcy work?

So, how does a self-petitioned bankruptcy work? In a nutshell…

Once you’re approved for bankruptcy, you’ll be under a bankruptcy order, which usually last for one year but can be longer.

During this year, you cannot be contacted by creditors and you will have to live under the financial restrictions decided by the Official Receiver and stated in the order. The Official Receiver is the person who oversees your bankruptcy.

Assets may be sold to pay some of your debts off.

If you keep to all the terms of the bankruptcy order for the full 12 months, you will be discharged from bankruptcy and most debts will be written off.

Find out your debt options

What happens when you’re discharged from bankruptcy?

Getting discharged from bankruptcy means you’re not classed as a “bankruptcy” anymore and much of your debt will be gone. But it doesn’t spell the end of some restrictions and obligations.

Getting discharged from bankruptcy doesn’t mean the bankruptcy order will be over. You may need to follow the order, as decided from the outset when it was made.

Even after the discharge, any assets you own including your home could still be sold in the following three years.

And you may need to keep paying creditors for a further three years as part of an Income Payments Agreement or an Income Payments Order. This is quite common.

Does bankruptcy force you to sell your home?

The Official Receiver could force the sale of your home to help pay existing debts. The property will be sold and any equity you have will be used to pay creditors. Although, this may not happen straight away.

Who qualifies for bankruptcy?

Anybody who cannot pay their debts in a reasonable time can consider using bankruptcy to get out of debt and get a fresh start. However, it’s essential that you get debt advice from a charity first.

There are serious repercussions of using this insolvency solution, and you may be better off using one of the alternative debt solutions. If you have less than £30,000 of debt, you might prefer to use a Debt Relief Order (DRO) instead.

What is a Debt Relief Order?

A Debt Relief Order is another insolvency debt solution for people with less than £30,000 of unsecured debt and no significant assets. It’s sometimes considered a softer form of bankruptcy.

The DRO works by preventing all unsecured creditors and debt collection agencies from contacting you or applying interest to debts for one year.

If your financial situation hasn’t improved during the 12 months, all unsecured debt will be written off with no further obligations on your part.

Can I go bankrupt if I have no assets?

Yes. you can still go bankrupt if you have no assets. It might even be more advantageous to use bankruptcy as a debt solution if you don’t own assets, but you could also consider a DRO depending on the amount of debt you owe.

If you have no assets, there won’t be anything the Official Receiver to sell to raise funds to pay creditors. But this doesn’t prevent you from applying to go bankrupt.

The benefits of declaring yourself bankrupt

The main benefits of choosing a voluntary bankruptcy are:

You can apply if you feel it’s the best way to deal with your debt, regardless of how much debt you have, i.e. there is no minimum debt for voluntary bankruptcy.

By taking this action, you prevent creditors from taking further action, which may have included legal action resulting in more costs and debt.

Creditors cannot contact you at all during the bankruptcy

As long as you keep to the terms of the bankruptcy order, much of your debt will eventually disappear to give you a fresh start.

You can access free debt advice in the UK to know whether bankruptcy is the right option.

The drawbacks of declaring yourself bankrupt

Some of the downsides of bankruptcy are:

You must pay to apply, which isn’t refunded if the bankruptcy application is rejected

You will need to live under strict conditions regarding your finances and habits

You may be forced to sell assets to pay off some of your creditors or debt

You may need to pay some of your income to creditors and continue this for three years after getting discharged from the bankruptcy

Your bankruptcy will be recorded on the personal insolvency register, which is publicly available. But you can have your address removed when domestic violence is a concern.

The bankruptcy stays on your credit report for six years and severely damages your credit rating, making it hard to get approved for credit in the future.

Bankruptcy can affect some types of employment, mainly positions in finance.

Can I have a bank account if I declare myself bankrupt?

Your bank accounts will be frozen as part of the bankruptcy process. But you will be able to open a basic bank account thereafter as having a bank account is considered a human right in the UK.

In some instances, you might be able to keep your existing bank account for essential daily expenses

The bank account you get will only be able to perform certain functions. It may allow you to pay bills and withdraw money from an ATM, but it may not let you make car payments online or in-store.

Bankruptcy and immigration

By now, I should have reiterated enough of the seriousness of using bankruptcy to clear your debts.

But there is another consideration for those without British citizenship but hoping to get it in the future.

Being declared bankrupt can negatively affect your chances of becoming a British citizen. This is best discussed with a debt charity or with a qualified immigration agent.

How much does it cost to declare yourself bankrupt in the UK?

One of the most common questions among debtors considering bankruptcy is… how much does it all cost?

This is a question I’ve been asked before and one that frequently appears on reputable foams, like this example:

How much does it cost to declare yourself bankrupt in the UK

Source: https://forums.moneysavingexpert.com/discussion/382438/how-much-does-bankruptcy-cost

You have to apply for bankruptcy, which comes with a non-refundable application fee. The fee is currently £680, which is subject to change.

If you cannot afford £680 straight away, you can pay the fee in instalments. But the application won’t be submitted and considered until the full £680 has been paid.

There might be financial aid available to some people wanting to apply, which is best discussed with a debt charity.

How do you apply for bankruptcy?

You apply to make yourself bankrupt online using the UK government website.

There is no other way to make a bankruptcy application, but you could get help if you’re not confident using the online service. You’ll also pay for the application online.

If the application is successful, you’ll receive a copy of your bankruptcy order and may have to have a face-to-face interview with your Official Receiver.

You cannot apply for bankruptcy in this way if you live in Scotland or Northern Ireland.

Can you have a joint bankruptcy?

No, bankruptcy is an individual debt solution unless it’s for business partners to deal with business debts. Joint debts can still be included in your individual bankruptcy, but this will have consequences for the joint debtor not going bankrupt.

Can you take out a loan while bankrupt?

You must tell any credit that you’re bankrupt when applying for credit worth £500 or more. It’s extremely unlikely that a creditor will approve you for a loan if you’re currently bankrupt.

Going bankrupt – no assets? (Summary)

You can still use bankruptcy as an insolvency solution if you have no assets, such as a property or vehicle.

The only difference is there won’t be any assets that can be sold by the Official Receiver to raise money to pay creditors. However, you might also want to consider a Debt Relief Order in this situation.

“It will only get worse” 😩

It’s cliché to say, but with debt it’s true; the longer you leave it, the worse the problem gets.

There are straightforward and effective ways to deal with debt, but you have to know your options.

Fill out the short form to find out about the debt solutions that could reduce your monthly payments or even write off some of your debt.