You may be thinking about filing your own bankruptcy petition, but what if you don’t have any assets?

Uncover whether bankruptcy is still an option for people without property, equity, car or other assets. We discuss everything you need to know about bankruptcy with no assets in the UK. 

First, what is bankruptcy?

Bankruptcy is an insolvency option for people with debt they cannot afford to repay in a reasonable time. 

You can apply yourself, or a creditor may be able to make you bankrupt if you refuse to pay your debts when you have enough money to repay. 

There are different stages within the process of bankruptcy. These stages can be simplified to applying for bankruptcy, being undischarged and then finally being discharged and free from most debts. 

We explain this in more detail soon. 

Find your best debt solution

This 4 question debt calculator will tell you if you’re eligible.

What is the total amount of your debt?

How much do you need to owe to go bankrupt?

There is no minimum amount of debt you need to owe to apply for bankruptcy. However, if you have less than £20,000 of debt and no assets you may benefit from a Debt Relief Order instead. 

The cost of this solution is much cheaper than the bankruptcy application fee. 

We have a Debt Relief Order guide to tell you more!

Discharged and undischarged bankruptcy

Once your bankruptcy is accepted, you will become an undischarged bankrupt. In most cases, this will last for 12 months and you will need to comply with restrictions placed on you and any debt repayments organised by the Official Receiver. 

After one year, most people get undischarged, which means those restrictions are lifted and you are simultaneously free from most debt. You may have to continue some repayments from your income for up to three years, and some debts are not written off by becoming bankrupt.

Your undischarged period could be extended if you have acted recklessly or been involved in fraud. Some people’s undischarged period can be extended to a maximum of 15 years, although this is exceptionally rare. 

Who is the Official Receiver?

An Official Receiver (OR) is someone who works for the Insolvency Office. They handle bankruptcy applications and may be involved in the whole process. 

The OR will place restrictions on you and sell your assets. You must tell the Official Receiver about all of your money, income and assets at the start of the process – and any changes thereafter. 

What percentage of bankruptcies are denied in the UK?

It is estimated that fewer than 1% of bankruptcy applications are rejected by the Insolvency Office. 

If you are unsure if you qualify, you could speak with a debt advice charity or ask an insolvency service company. 

How much does it cost to go bankrupt?

To apply there is an initial fee of £680. There are additional fees that are paid to the Insolvency Office for their work, which are paid out of any assets you have.

Read on for more information!

What happens if you go bankrupt without any assets?

Your assets are used to repay creditors as much as possible, but before creditors are paid, the sale of any assets is used to pay for the fees associated with bankruptcy. 

The charges you face include administration costs starting at £1,990 and a general fee of £6,000. But if you chose this debt solution without any assets, the Official Receiver will still process your bankruptcy application and you will not have to pay (all of) this money. 

You will still have to pay to apply.

If your case is being dealt with by an insolvency practitioner instead, they may still apply fees to carry out the insolvency service even if you have no assets.

If you have no assets to be sold to pay the Official Receiver, you will also have no assets to pay off creditors. This does not stop you from becoming bankrupt and free from your debts. 

Consider a Debt Relief Order (DRO)

Debtors with no assets and debts below £20,000 may not be most suitable for bankruptcy. It may be more advantageous to apply for a Debt Relief Order instead, which only costs £90 to apply for. 

The DRO stops creditors asking you to make payments and stops any enforcement action. After one year, if your financial situation doesn’t improve, most – if not all – of your debts are wiped. 

Does going bankrupt clear all debts?

Most debts will be included in your bankruptcy order, such as credit card debts and loan arrears. But you may still have to repay:

  1. Magistrate Court fines
  2. Other types of court fines
  3. Parking fines
  4. Child maintenance debts
  5. Student Finance loans
  6. Social loan debt

You may have to continue paying some existing creditors from your wages after being discharged from bankruptcy, for up to three years. This is known as an Income Payment Order (IPO). You will not need to attend court to have this arrangement finalised – unless your refuse the repeat payment. 

Can you keep your bank account if you go bankrupt?

Your bank accounts will be frozen during the process of being made bankrupt and the financial institution will decide whether to close your accounts or leave them open. 

Everyone in Scotland, England and Wales have a legal right to an account to receive wages and keep paying essentials like house rent. Therefore, banks offer a basic account that allows simple transactions.

More Bankruptcy FAQs

What happens to my joint account?

If you go bankrupt with a joint bank account, the bank might give half of the money to the other owner or remove your name from the account.

Will I lose my job?

You will not lose your job unless you are a person in a specific occupation, such as working in finance. Some people working in casinos can lose their license to work, but they can reapply to the Gambling Commission. 

Can I keep my house if I’m bankrupt?

You may be able to keep your house if a family member is willing to buy your share of the property. If the house is not sold within three years, the OR can no longer sell it and it will be returned to you. 

If you have family and dependents living in the house with you, any sale can be delayed by 12 months. 

If you rent a house, you can usually stay living in the property unless you are already being chased for rent arrears or if the rental agreement states otherwise. 

Can I go on holiday with undischarged bankruptcy?

If you are undischarged, you can go abroad from England, Wales or Scotland but you may have to inform the OR of your address. In Northern Ireland, you have to apply to go overseas. 

Can I be self-employed after bankruptcy?

You can become a sole trader business or company owner again but only once you have been discharged. If you want to be self-employed, you may find it difficult to source credit for the new business. 

Will bankruptcy show on my credit rating?

Bankruptcy will be recorded on a public register and will show on your credit history for six years. 

Can I apply to be bankrupt even without assets?

Yes, it is still possible to apply for your bankruptcy when you do not own a house, have equity in a property, own a car or other assets. You may not be able to cover the costs within the process as a result, but this will not stop your application. 

You should always seek advice before considering bankruptcy. 

Can I get a mortgage after bankruptcy?

It can be difficult to get a mortgage after you have been declared bankrupt. If you apply to buy a property, you will need a certificate to show your bankruptcy has ended. The cost for the first copy is £70 and £10 per copy thereafter. 

It can be difficult to get other credit after the process too, including credit cards, personal loans and even a car hire purchase agreement.

Is my pension an asset during bankruptcy?

Some pensions are classed as an asset, but approved pensions are not. State pensions are approved, meaning payments won’t be taken from them. 

Get advice from a registered charity!

Make your bankruptcy process clearer and less stressful by seeking advice from a debt charity. 

Or you may want commercial support and advice from a debt management company. 

Bankruptcy could be a smart move for some people, but always consider all the debt solutions available to you.

There could be a better alternative!

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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