How long does bankruptcy last?

Bankruptcy usually lasts for at least 12 months. 

When it ends, you’re discharged. That means most of the conditions of your bankruptcy are lifted.

A few months later, details of your bankruptcy should be removed from the public register where they’ve been recorded.

If you’re making monthly payments towards your debts as part of an income payment arrangement (IPA), this is likely to continue for another few years.

And the bankruptcy will stay on your credit file for six years from the date it was agreed. This will make it difficult for you to borrow from mainstream lenders.

Let’s look at that timeline in more detail.

12 months – discharge from bankruptcy

After 12 months, you’re usually discharged and most debts are wiped out. You’ll still need to pay any debts not covered by bankruptcy e.g. student loans, fraudulent debts and criminal fines. 

Being discharged means the restriction associated with bankruptcy will be lifted e.g. you’ll be able to borrow more than £500 without declaring you’ve been made bankrupt. Some lenders may still ask if you’ve ever been bankrupt – you should always be honest in this situation.

Can bankruptcy last longer than 12 months?

Your bankruptcy could be extended beyond 12 months if you don’t cooperate with the person handling your bankruptcy (trustee). This is usually the official receiver but could be an insolvency practitioner. 

If your trustee thinks you’ve acted dishonestly or irresponsibly, they can ask for your bankruptcy to be extended with a bankruptcy restriction undertaking (BRU) or bankruptcy restriction order (BRO).

A BRU or BRO can add between two and 15 years to your bankruptcy.

15 months – removal from the individual insolvency register

Once you’ve been discharged, your details will be removed from the public individual insolvency register three months later. 

Your details will stay on the register for longer if you have a BRU or BRO.

Three years – dealing with home equity

After your bankruptcy application is approved, the official receiver has two years and three months to decide what to do about any equity in your home. Equity is the value of the part of your property you own outright i.e. the value of your home minus the remaining mortgage. 

After making a decision, the official receiver has another nine months to act on it. This gives them three years in total to deal with the equity in your home.

Depending on how much equity you have, they could:

• sell your home
• get a charging order so they can take any equity if you sell or remortgage further down the line
• give it back to you if it’s a small amount 

If the official receiver discovers a home you didn’t tell them about, they have three years from when they found out about it - not from your bankruptcy date - to deal with any equity.

Three to four years – income payment arrangements

If you have at least £20 in disposable income each month, the official receiver may set up an income payment arrangement (IPA) at some point during the 12 months of your bankruptcy. 

This money will go towards your debts and usually lasts for three years. 

This means you’re likely to make your last IPA payment between three and four years after you’re declared bankrupt.

Any missed payments can still be chased after this time.

Six years – credit file impact

After six years, details of your bankruptcy will usually drop off your credit file. But if you have a BRU or BRO, it could stay on your file longer.

When your bankruptcy drops off your credit file, any debts that were included should also disappear – check your records with all three credit reference agencies (Experian, Equifax, TransUnion) to make sure everything is accurate.