Bankruptcy: a high-profile case

The former Scotland and Blackburn Rovers captain Colin Hendry has been discharged from his bankruptcy. The retired footballer had amassed debts of £2.1 million, which he was unable to repay.

His discharge means most of his debt will be written off, according to footbo.com, a site which provides 'a place where fans can connect and interact with peers and rivals'.

Of the £2.1 million debt, he will only have to repay £36,000 - at a rate of £1,000 per month over three years. Mr Hendry was declared bankrupt in June last year; following his bankruptcy, the amount he will repay is less than 2% of the total debt.

Bankruptcy is a form of insolvency and a legal process. If you were declared bankrupt, the value of your assets, such as your property, would be shared out fairly between your lenders. You would be protected from any further legal action from them as well.

Any outstanding debt would be written off when you became 'discharged' - which would usually happen after 12 months - although you may be required to make contributions for three years.

Bankruptcy may be suitable for people with big debts and/or a low income - who have debts that they basically have no real hope of repaying.