Eligibility for bankruptcy

Bankruptcy is one of several solutions to those available seeking to become debt free. Often seen as a last resort, due to the possible implications to those with assets, bankruptcy will allow an individual to deal with debts they are unable to repay. It will usually result in any available assets being sold to go towards the money outstanding.

Unlike some of the alternative debt solutions, such as Individual Voluntary Agreements (IVAs) and Debt Relief Orders (DROs), there are really only 2 conditions that must be met in order for an individual to be considered for a bankruptcy order.

Debt owed

Generally, to be considered for bankruptcy, the amount of debt owed must be greater than £750 and unsecured (eg not a secured loan on a property). This could include credit cards and overdrafts for example.


The debtor would need to be considered insolvent in order to petition for bankruptcy. Insolvency is when the debtor does not have enough money at the end of each month to repay debts after all essential living expenditure (such as rent/mortgage, utility bills, food and so on). Another way of looking at it would be that the debtor is unable to feed themselves after repaying the minimum monthly repayments on the debt.


While many people struggling with debts may feel that both of the above conditions apply, bankruptcy may not always be the best course of action to consider. There are a number of alternative options, as mentioned above, as well as debt management plans and even consolidation loans. Anyone with any significant asset (such as a property or car) will have to consider the possibility that they will need to sell in order to put the money toward the outstanding debt. There may also be implications on employment and there will certainly be implications gaining further credit.

It is important that anyone considering bankruptcy seek proper advice from a licensed Insolvency Practitioner or money advisor, or from one of the free advice services such as the Citizens Advice Bureau (CAB) to establish if there is a more suitable option available.