How long does bankruptcy last?

It’s no secret that bankruptcy is a serious debt solution and a decision that shouldn’t be made lightly. Although bankruptcy is a huge decision to make, it could be the best option for you – if you have already looked into other debt solutions – and may see you debt free in 12 months.

If you are considering bankruptcy, you may be wondering how long it lasts and how it could impact you and your everyday life. Here, we explain how long bankruptcy lasts and the effect it may have on you.

How long will my bankruptcy last?

Bankruptcy usually lasts 12 months in England and Wales. During this time you are referred to as an undischarged bankrupt, which is the legal term for someone going through bankruptcy. We have more information about what this means here.

After this 12 month period you are discharged and free of your debts. However, the debt solution does have a lasting effect on you. This timeline below shows how and when bankruptcy could affect you:

12 months after bankruptcy

You are discharged and your debts are written off. Restrictions against you will also end – read more about these here.

15 months

Your bankruptcy listing will be removed from the Insolvency Register.

Three years

This is the official deadline for your Official Receiver to finish dealing with your home. However, if they weren’t aware that you owned your home at the start of your bankruptcy, it will be three years from the date they were notified and started dealing with it.

If you had an IPA (income payment arrangement) set up against you, this will also be around the time you finish paying this.

What is an IPA?

An IPA is arranged if the Official Receiver discovered you had money left over every month, after paying your agreed essential living costs. The amount you pay is then distributed amongst those creditors you owe money to.

Six years

Your bankruptcy will be removed from your credit report. It’s important to understand creditors may still ask if you have ever been made bankrupt in the past. Even if your bankruptcy has been removed from your credit report, you must answer honestly.

The lasting effects of bankruptcy

While bankruptcy itself only lasts 12 months, the effects of it will be felt long after. Here, we’ve broken down some issues to be aware of:

Renting a property

Many lettings agents and landlords ask if you have been made bankrupt in the past, so you may find it hard to be accepted for a tenancy agreement. It isn’t impossible though if you explain your situation you may able to come to some sort of arrangement. You may also be able to encourage a landlord to agree to you renting from them if you offer a reliable friend or relative as a guarantor who can pay your rent should you ever fall behind.

Your credit report will be affected

Your bankruptcy will be listed on your credit report for six years from the date it was created. It will lower your credit rating as it is seen as a sign that you may not be able to manage your money. The impact of your bankruptcy on your credit report will lessen over time but is still something to be aware of.

This can make it very hard to obtain credit during the bankruptcy period and once you have been discharged, as creditors review your credit report every time you make an application to borrow money. This is true especially if you wish to borrow large amounts, such as a mortgage.

Your ability to apply for a current account will be impacted

During your bankruptcy, however – and for 12 months after – you may be unable to open a current account featuring an overdraft or chequebook. In this case, it is best to simply open a basic account that you can withdraw cash from for everyday expenses.

The account you are using now will be frozen for 2-7 days, once your bankruptcy order is made, as the Official Receiver investigates your finances. In some cases, it may be closed by your bank. We have more information here about what happens to your account.

Your employment

If you work in any of the following roles, you will be unable to carry them out while your bankruptcy is in place:

• Insolvency practitioner.
• Justice of the Peace.
• MOT authorised examiner.
• Charity trustee.
• Company director.
• Registrar of births, marriages and deaths.
• Consumer credit licence holder.
• Councillor or MP.
• Magistrate.
• School governor.
  

You should also check your employment contract, to see if there are any clauses about what happens if you are made bankrupt while in your role. It’s unlikely your job will be affected or that you will lose it – if it isn’t any of the above positions, but it’s best to check.

Seek support from those close to you 

Bankruptcy can continue to have an impact on you in the future. This could be if you need to make a big decision – such as your job choice, when you wish to apply for a mortgage or for a private tenancy agreement or even when telling future partners about your past debts.

This is why it’s important to seek the support of those closest to you – such as a family member or friend – when you are considering bankruptcy. They can help you talk through your situation and decide what may be best, as well as offering moral support. Have someone you can confide in and share any worries with every step of the way.

If you feel like you need any further help or advice on bankruptcy or the issues we’ve included in this guide then get in touch with our team of expert financial advisors today on 0800 316 1833 or complete our contact form to receive a call back at a time that is convenient to you.