Bankruptcy is a legally binding debt solution, which is usually considered to be a last resort if you are unable to pay back your debts in a reasonable amount of time. Here are some key facts about bankruptcy:

Bankruptcy is a formal insolvency procedure for people living in England, Wales, and Northern Ireland

If you live in Scotland, Sequestration, which is considered to be equivalent, might be right for you

You can apply for bankruptcy yourself, or one or more of your creditors can petition to make you bankrupt

Applying for bankruptcy is relatively expensive – it incurs a £680 fee

This application is made to the Insolvency Service – the body responsible for insolvencies in England and Wales

In Northern Ireland, applications for bankruptcy are handled by the High Court

Bankruptcy usually involves the sale of valuable assets you own, such as a car or house, to raise funds to pay back your creditors

You may also have to pay a monthly contribution towards your debts for up to three years, if you have enough surplus income

Bankruptcy itself usually lasts for one year, at the end of which any remaining debts are written off

Your career might be affected whilst you go through bankruptcy – you will be unable to direct a company, for instance

Bankruptcy includes all of your unsecured debts

It can also include mortgages, but the property must be surrendered

Once bankruptcy has been approved, your creditors will no longer be able to contact you, or take further legal action to recover your debts