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Bankruptcy in the United Kingdom

Bankruptcy in the United Kingdom

Bankruptcy in the United Kingdom – you can be made bankrupt in England and Wales in two cases:

  • Debtor is unable to pay debts and he applies to the court himself to declare his bankruptcy. (In comparison: In Lithuania total sum of debts must exceed 25 minimum monthly  wages)
  • Creditor (the person you owe money to) applies to the court if you owe him 750 pounds or more (approximately 3000 litas)


The procedure of bankruptcy in England is based on two principles: firstly, your assets, such as equity, can be used to pay your debts, which will be distributed to all your creditors. Secondly, all the rest of your debts might be written off. Once a bankruptcy order has been made against you, your creditors can no longer pursue you for payment. Payment becomes the responsibility of the trustee.

Essentially, one can be made bankrupt only if debtor is unable to pay debts or total sum of debts exceeds the value of assets. That is why the administrator of bankrupt firstly studies financial and private activities of bankrupt individual. Then he informs the court and creditors about planned course of action regarding bankruptcy. In the process of bunkruptcy debtor must not obtain credit over 500 pounds without telling the creditor that he is bankrupt. Debtor‘s name and details will be published in a bankruptcy register and can be kept there for 6 years; furthemore, the debtor will be not allowed to use credit cards, bank or building society accounts.

Debtor‘s earnings and assets are allocated as following:

  1. Service of administrator of bankruptcy is paid first;
  2. Next brokers’ commissions are paid
  3. Thirdly wages of debtor’s employees are paid.


Process of bankruptcy usually takes almost a year. If in a process of bankruptcy there is no serious infringements, then debt issues can be written off and by lawe creditors can no longer pursue a debtor . However, the court can extend the time of the bankruptcy process for 15 year, if before or within the bankruptcy process debtor was engaged in illegal activities.

We are honest towards our customers and try to show all the advantages and disadvantages of the bankruptcy process in the United Kingdom. It is noticeable that no matter how favorable conditions are for the bankruptcy in the United Kingdom, bankruptcy is never considered as an easy solution, which will not result in any bad consequences.

Once an individual is bankrupt, part of or all his assets (including earnings) can be used to pay creditors. Furthermore, there will be several obligations for debtor to assume.

Debtor’s personal details, including his name, will be published on a bankruptcy register called Individual Insolvency Register and will be removed after 3 months from a date bankrupt individual is discharged from bankruptcy restrictions and debts. Usually it takes 15 months. Bankruptcy record is kept for 6 years in the United Kingdom. That is why even after all the bankruptcy process is finished it is still very difficult for ex-bankrupt to obtain new credits.


In conclusion we will provide a comparison table for bankrupt individuals in The United Kingdom and Lithuania:


in Lithuania

in the UK

The duration of the process

5 years

1 year

The creation of the bankruptcy law and its usage

since march 2013

since 1986

Price of the bankruptcy process

Approx 30000 LT

Approx 7000 LT

Attitude of a society and institutions towards a bankrupt

Accusatorial, disapproval

With understanding

Mandatory deductions during bankruptcy process

20% from a minimum wage and 70%

Are carried out From income exceeding minimum wage  only in case when debtor has at least 20 pounds in free disposition at the end of the month