After you're declared bankrupt your assets will be put under the charge of an Official Receiver or Trustee in Bankruptcy. This effectively means that you have to ask someone else before you try to spend any money and that different rules will apply to your other assets.
What money can you keep?
You will only be given basic living expenses during the period of your bankruptcy, and the remainder of your money will be distributed to your creditors. You have to tell the Official Receiver or Trustee of any additional money you have in bank accounts so that can also be distributed.
Will you be able to borrow any money?
You cannot apply for credit of more than £500 - whether that is on your own or with someone else - without declaring your bankruptcy status. If you open a bank or building society account, you have to disclose your bankruptcy, and you would not be allowed overdrafts or chequebooks by the institution.
It is highly unlikely that you'll be accepted for any credit, and if you are it's likely that the repayment costs will be incredibly high.
What belongings can you keep?
If you have tools or other items that are essential to your work, including a car or van or other vehicle, then you will be able to keep them. Clothing, basic household items, bedding and furniture will usually be kept by you, although if the furniture is expensive, you may be told to replace this with a cheaper alternative. Any proceeds would then be paid to your creditors.
What happens to your home?
If your home is be taken from you to be sold, then you may have 12 months grace to get a new place to live if you have a partner or family. You can ask for someone else, a relative or friend to buy your share of the property, but it would have to be at the market value. To find out more you can visit the GOV.uk website.
What if you own a business?
You cannot carry on a business in a different name from the one you were made bankrupt under without telling all of your business customers what name you were using when you were made bankrupt.
For the period of the bankruptcy, you and your family will be living a fairly austere lifestyle. So if you choose to go down this route, be prepared.
Your credit score will be affected too. A bankruptcy will stay on your credit record for at least six years, and can be as long as 15 years if you are subject to a bankruptcy restrictions order.
Do you have to go bankrupt?
There may be alternatives available which you may wish to consider before going through personal bankruptcy.
If you would like to learn more about bankruptcy before deciding on the best steps to take, you can read our guide to bankruptcy.