To be made bankrupt, a court has to issue a bankruptcy order against you. This can happen for 2 reasons:
- you can apply to the court if you're unable to pay your debts
- your creditors (the people you owe money to) apply to make you bankrupt if you owe them £750 or more
When you're made bankrupt:
- your assets can be used to pay your debts
- you must follow certain rules called the ‘bankruptcy restrictions'
- your name and details will be published on a bankruptcy register called the ‘Individual Insolvency Register'
- after 12 months you're usually discharged (freed) from your bankruptcy
Bankruptcy only applies to individuals. Limited companies that can't pay their creditors are ‘insolvent' and can face compulsory liquidation .