Bankruptcy, IVAs and debt in divorce

You can go bankrupt, or use another formal debt solution, during or after a divorce, and if your ex goes bankrupt you may become one of their creditors. Either way, bankruptcy changes what's left to share, it can put the family home at risk, and it usually does not wipe out debts under family court orders or child maintenance. Free, regulated debt advice is available, and you should get it before you decide anything.

If you're reading this at night with a pile of letters you can't face opening, please know this is more common than it feels, and there is a way through it. Debt is one of the things that most often follows a separation, because one household's money has to cover two. Nothing in this guide means you've failed.

This guide explains how things work in England and Wales. It isn't advice about your own situation, and insolvency and divorce interact in ways that can be hard to undo, so please talk to a free debt adviser and a family solicitor before you take a step.

Your options if you can't pay your debts

There are five main routes in England and Wales: a debt management plan, the Breathing Space scheme, a debt relief order, an individual voluntary arrangement and bankruptcy. Which suits you depends on what you owe, what you own, your income and whether you own a home, and a free debt adviser can go through them with you.

• Breathing Space. This gives you legal protection from most creditor action, including interest, charges and enforcement, for up to 60 days while you get advice. Only an FCA-authorised debt adviser or a local council debt service can start it, and you can have a standard breathing space once in any 12 months. If you're receiving mental health crisis treatment, a separate mental health crisis breathing space lasts as long as the treatment, plus 30 days (GOV.UK).
• Debt management plan (DMP). An informal agreement to pay your unsecured debts in full at a rate you can afford. Creditors don't have to agree, and unless they agree otherwise they can still ask for the full amount later (GOV.UK). Some companies charge set-up and monthly fees for a DMP; debt charities such as StepChange arrange them without fees (StepChange).
• Debt relief order (DRO). For people with low income and few assets. There's no fee. You must owe less than £50,000, have assets worth less than £2,000, have less than £75 a month spare after essential costs, and not own a vehicle worth £4,000 or more. You can't apply on your own: it goes through an approved debt adviser. Payments to the creditors included stop for 12 months, after which those debts are written off (GOV.UK). Couples can't apply jointly; each person applies separately (National Debtline).
• Individual voluntary arrangement (IVA). A legally binding deal with your creditors, set up by an insolvency practitioner, to pay part of what you owe over a set period (GOV.UK). National Debtline says IVAs usually last five years, sometimes six for homeowners, and that insolvency practitioners' fees are typically £4,000 or more, usually taken from your monthly payments. If you can't keep up the payments, the IVA can fail and the insolvency practitioner can make you bankrupt (National Debtline).
• Bankruptcy. You apply online and the fee is £680. An adjudicator decides within 28 days (GOV.UK). Your assets go to a trustee, usually the official receiver, to pay your creditors. Most people are discharged after 12 months, but you may have to make payments from your income for three years, and the trustee has longer to deal with your home (Citizens Advice).

What happens to the family home

If you're made bankrupt, your share of the home passes to the trustee, and the trustee usually has three years from the date of the bankruptcy to deal with it, for example by selling it or getting a charge over it. If the trustee does nothing in that time, the share returns to you (Insolvency Act 1986, section 283A). The three years can start later if you don't tell the trustee about the home within three months.

A few things matter when one of you is bankrupt and the other still lives in the home:

• The trustee takes only the bankrupt person's share. If you own the home jointly, your own share stays yours. You, or a family member, may be able to buy the bankrupt person's share from the trustee instead of the home being sold. A transfer of the share to you for nothing, to keep it from creditors, is not allowed (Citizens Advice).
• The first year. To sell, the trustee needs a court order. In deciding, the court must weigh the creditors' interests against the needs and resources of the bankrupt person's spouse, civil partner or former spouse, and the needs of any children. Once a year has passed since the bankrupt's property passed to the trustee, the court must assume the creditors' interests outweigh everything else, unless the circumstances are exceptional (Insolvency Act 1986, section 335A). Citizens Advice gives a disabled child whose needs the home has been adapted for as an example of the kind of case a court may treat as exceptional.
• If you're married and not on the deeds. A spouse or civil partner who isn't an owner can have "home rights" to live in the home under the Family Law Act 1996. If those rights were already protected as a charge on the property, they continue to bind the trustee, and any application about them goes to the bankruptcy court, which applies the same one-year rule. Rights can't be created in the gap between the bankruptcy application and the property passing to the trustee (Insolvency Act 1986, section 336).
• Very low equity. The trustee can't get a court order to sell if the bankrupt person's interest is under £1,000 (Citizens Advice).

Our guide to what happens to the house in a divorce explains how the home is usually dealt with when there's no insolvency.

Joint debts and joint accounts

If you and your ex have a joint loan, credit card or overdraft and one of you goes bankrupt, the lender can ask the other person to pay the whole of what's left. That's because joint borrowers are each responsible for the full amount, whatever you've agreed between yourselves (Citizens Advice).

The same applies to a joint bank account that's overdrawn: each account holder can be asked to repay all of it (MoneyHelper). If you didn't sign up to a debt in your name, for example because your ex took it out without you knowing, you may be able to dispute it, and Citizens Advice can help you check.

If your ex is going bankrupt, tell the lenders on any joint debts early, explain what you can afford and ask a free debt adviser to look at whether you need a solution of your own. It's also worth knowing that a trustee usually looks at what a bankrupt person gave or sold to a partner in the five years before the bankruptcy, and can ask for it back or for it to be paid for (Citizens Advice).

How bankruptcy affects a divorce settlement

Bankruptcy can change a settlement in two ways: it shrinks what there is to divide, and it can reopen a deal already done. Most debts under a family court order also survive the bankruptcy, so going bankrupt is rarely a way out of a settlement.

If the bankruptcy comes before the settlement. Once someone is made bankrupt, their property passes to the trustee for their creditors. A financial order made after that can only deal with what the bankrupt person still has, which is why your solicitor needs to know about any insolvency as early as possible.

If the settlement comes first. A trustee can ask the court to undo a transaction made in the five years before the bankruptcy if it was "at an undervalue", meaning the bankrupt person gave something away for nothing, or for much less than it was worth. The law specifically includes transactions made in consideration of marriage (Insolvency Act 1986, sections 339 and 341). In 2007 the Court of Appeal held that a property adjustment order made in genuine divorce financial proceedings is not normally a transaction at an undervalue, because the spouse gives up their own claims in return (Haines v Hill). A settlement that was collusive, or designed to put assets out of creditors' reach, can still be challenged.

What happens to the debts under the order. Section 281(5) of the Insolvency Act 1986 says that discharge from bankruptcy does not release the bankrupt person from any debt "under any order made in family proceedings" or under a Child Support Act maintenance calculation, except to the extent and on the conditions the court directs (Insolvency Act 1986, section 281). In practice, that means:

• Lump sums and costs orders from family proceedings can be claimed in the bankruptcy (Insolvency Rules 2016, rule 14.2), and whatever isn't paid is normally still owed after discharge.
• Maintenance payments under a family court order can't be claimed in the bankruptcy, but they aren't released by it either, so they remain payable.
• The bankrupt person can ask the court to release them from some or all of these debts, and the court decides whether that's fair (Citizens Advice).

Our guide to consent orders and clean break orders explains how financial orders are made in the first place.

Child maintenance is not written off

Child maintenance has to be paid whatever debt solution you use. Maintenance worked out by the Child Maintenance Service under the Child Support Act 1991 is not released when a bankruptcy ends (Insolvency Act 1986, section 281(5)), and child maintenance and arrears can't be included in a debt relief order (National Debtline).

A debt adviser will treat child maintenance as an essential cost when working out what you can afford for other creditors. If your income has dropped, you can ask the Child Maintenance Service to look at the amount again. Our child maintenance guide explains how it's worked out.

If your ex goes bankrupt

If your ex owes you money under a court order and goes bankrupt, you become one of their creditors. You can register your claim with the official receiver or the insolvency practitioner handling the case (GOV.UK), and you can look the case up on the Individual Insolvency Register.

• Claim an unpaid lump sum or costs order in the bankruptcy. Creditors are paid in proportion to what they're owed, so you may get only part of it, or nothing if there are few assets.
• The rest is normally still owed. Because of section 281(5), what's left of a lump sum, maintenance under a court order, or child maintenance usually survives your ex's discharge, unless the court orders otherwise. You may be able to enforce it later; our guide to enforcing a court order after divorce explains how.
• Watch your own position on joint debts and the home, as above. If you live in a home your ex has a share in, get advice quickly, because the first year after the bankruptcy is when the court gives most weight to your needs and the children's.

If your divorce finances aren't settled yet, tell your solicitor straight away. The timing of the bankruptcy and of any order can make a real difference.

Your credit file and your ex

Bankruptcy, a DRO and an IVA each usually stay on your credit file for six years. For bankruptcy that's six years from the bankruptcy order (Citizens Advice), and for an IVA it's six years from the date it began (National Debtline). Credit reference agencies keep DRO records for six years too (National Debtline).

If your ex goes bankrupt and you still share a joint account or loan, you're financially linked on your credit files, and lenders may take their record into account when you apply. Once you have no joint credit left, you can ask each credit reference agency for a notice of disassociation (MoneyHelper). When a bankruptcy ends, you can send proof of discharge to the agencies to update your file. Our guide to rebuilding your finances after divorce covers building your credit back up.

What to do next

Start with free debt advice, then speak to a family solicitor before you sign a settlement or apply for anything. A good order of steps:

1. Open the letters and write down every debt, who it's with and whether it's in your name, your ex's or both.
2. Talk to a free debt adviser. Ask whether Breathing Space would help while you work things out.
3. Tell your family solicitor about any debt solution you or your ex are considering, before any financial order is agreed.
4. Keep paying child maintenance, and essentials such as rent or mortgage and Council Tax, as far as you can.

Free debt advice and support

You never need to pay for debt advice. These services are free and confidential:

• MoneyHelper, the government-backed service, can point you to free debt advice online, by phone or near you (MoneyHelper).
• StepChange debt charity on 0800 138 1111 (StepChange).
• National Debtline on 0808 808 4000 (National Debtline).
• Citizens Advice, online, by phone or in person (Citizens Advice).
• The Insolvency Service on GOV.UK sets out the options for paying off your debts and how to apply for bankruptcy.

Common questions

Sources

1. GOV.UK, Applying to become bankrupt (fee £680, checked 11 November 2026)
2. GOV.UK, Options for paying off your debts: debt relief orders
3. GOV.UK, Options for paying off your debts: IVAs
4. GOV.UK, Options for paying off your debts: debt management plans
5. GOV.UK, Debt Respite Scheme (Breathing Space) guidance
6. GOV.UK, Register as a creditor in a bankruptcy or liquidation
7. Insolvency Act 1986, section 281 (effect of discharge)
8. Insolvency Act 1986, section 283A (bankrupt's home)
9. Insolvency Act 1986, section 335A (applications for sale)
10. Insolvency Act 1986, section 336 (home rights)
11. Insolvency Act 1986, sections 339 and 341 (transactions at an undervalue)
12. Insolvency (England and Wales) Rules 2016, rule 14.2 (provable debts)
13. Haines v Hill [2007] EWCA Civ 1284
14. Citizens Advice, Discharge from bankruptcy
15. Citizens Advice, Check which debts bankruptcy covers
16. Citizens Advice, Joint debts and belongings if your partner is bankrupt
17. Citizens Advice, Is your home at risk if your partner is bankrupt?
18. National Debtline, Individual voluntary arrangements fact sheet
19. National Debtline, Debt relief orders fact sheet
20. StepChange, Debt management plans
21. MoneyHelper, Joint bank accounts
22. MoneyHelper, Help if you're struggling with debt
23. Accountant in Bankruptcy (Scotland)
24. Department for the Economy, Bankruptcy in Northern Ireland

Keep reading

This guide is general information about debt, insolvency and divorce in England and Wales, not legal or financial advice. Fees, limits and rules change, so check the sources above, get free debt advice and speak to a family solicitor about your situation. Facts checked 11 November 2026.