Bankruptcy is a formal insolvency act which is usually a last resort if you cannot pay back your debts. Any assets you own is usually sold to raise funds to pay back your creditors. Any remaining money left over after your monthly budget could also go to your creditors each month for a period of up to three years.
Bankruptcy applies to people living in England, Wales and Northern Ireland. If you reside in Scotland then Sequestration is the equivalent which could be right for you. You can apply for Bankruptcy yourself or if your creditors decide, they can petition to make you bankrupt.