Going Bankrupt with No Assets – 2023 UK Guide

Declaring bankruptcy without assets is one way to wipe out large personal debts while gaining the opportunity for a fresh financial start. If you owe large sums of money and have few or no assets that can be lost, bankruptcy could be the best solution for your financial troubles.

However, bankruptcy can have long-lasting implications, not only on your finances but on your personal and professional life too. So it’s important to consult with a licensed insolvency practitioner before making the decision.

In this article, we explain the process of going bankrupt with no assets in the UK, before exploring what the alternatives could be.

Is it Possible to Go Bankrupt in the UK Without Assets?

Bankruptcy is a legal process that individuals can apply for when they can no longer pay their debts. Bankruptcy can only be applied for by insolvent individuals in the UK (not companies), and it results in large debts being wiped out after a 12-month period as undischarged bankrupt.

During this bankruptcy period, your finances will be taken over by an official receiver. Any income and assets you have will be scrutinised and may be used to pay off your debt. If you own a house or expensive car, these could be seized and sold to pay your creditors.

But what happens if you don’t have any assets? Going bankrupt with no assets in the UK is perfectly legal. In fact, bankruptcy could be the best choice if you have large debts but few assets. After all, you would have very little to lose and much to gain if you can clear major debts.

What Are Classed As Assets?

If you’re considering bankruptcy, it’s important to understand what counts as an asset. An asset is anything that holds value or that could help you to generate wealth. For the purposes of bankruptcy, you only need to consider personal and high-value assets.

This would include:

  • Property in your name
  • Vehicles
  • Your business
  • Expensive electronics
  • Investments
  • Savings
  • Antiques

The list of assets could potentially be extensive, as it includes anything that could be sold for a high value to pay your debts. This could include expensive televisions, works of art, antiques or designer shoes, amongst much more. If you are planning on going bankrupt with no assets, then always make certain your possessions won’t be classed as an asset before doing so.

In general, you’ll be allowed to keep any personal items that have little resale value. This includes clothing and kitchenware, for example. Your income is not classed as an asset, although you can be subject to an income payment order if your income is over a certain threshold.

What Are the Alternatives to Going Bankrupt with No Assets in the UK?

If you have little in the way of assets to declare, it might be very tempting to consider going bankrupt with no assets. However, while your debts will be cleared, there are many other negatives to consider too.

Bankruptcy affects your credit score for several years, and you will struggle to take out loans, secure credit and find a mortgage for a home. If you’re a renter, then your landlord can legally terminate your tenancy, while your standing in the community could be negatively affected, particularly if you hold a position of trust.

All these factors need to be considered, particularly when you consider that there are viable alternatives to going bankrupt with no assets. For example:

  • Individual voluntary arrangements (IVAs): Individuals in debt can arrange repayment plans with their creditors, consolidating loans and interest rates rather than declaring bankruptcy.
  • Debt consolidation loans: for small amounts of money, a consolidation loan can help get your finances back in shape.
  • Debt relief orders: If you owe less than £30,000, a debt relief order can help you to reorganise and repay your debts.

If the level of debt you’re in is comparatively low, it’s wise to attempt an alternative to bankruptcy first. If you owe more than £30,000 (the maximum amount you can owe when applying for a debt relief order), you can still try to arrange an individual voluntary arrangement. If this fails, then bankruptcy is the best (and last) option.

Can I Save My Assets When Going Bankrupt?

If you currently own assets such as a home or car, there are ways to transfer ownership of these and save them before declaring bankruptcy. The most common instance of this is when you have joint ownership of a family home, for example. In this case, it’s possible for your partner to buy you out, thereby saving the house.

If you own assets that are necessary for your job – such as a work van, car, or particular tools or equipment – you may also be able to keep these and declare bankruptcy with no assets. These types of assets are often judged on a case-by-case basis, so speak to a professional insolvency advisor for more information on your personal situation.

Can I Accrue Assets After Going Bankrupt?

Once you’ve been declared bankrupt, you can’t realistically accrue any assets for at least 12 months. As an undischarged bankrupt, any assets you might accrue during this period can be sold to pay your debts.

Ultimately, the goal of bankruptcy is to provide a fresh financial start. Once the 12-month bankruptcy period is over you can begin accruing assets again, although you will find it difficult sourcing credit for high-value items such as cars or property.

Contact Irwin Insolvency for More Information on Going Bankrupt with No Assets in the UK

Irwin Insolvency has over 25 years’ experience providing expert advice to insolvent individuals facing bankruptcy.

If you’re considering going bankrupt with no assets, our expert team of insolvency practitioners have the experience and knowledge to help you. Contact Irwin Insolvency today for more information.

Contact Irwin Insolvency today for your free consultation

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0800 254 5122

About the author

Gerald Irwin

Gerald Irwin is founder and director of Sutton Coldfield-based licensed insolvency practitioners and business advisers, Irwin Insolvency. He specialises in corporate recovery, insolvency,
 rescue and turnaround.