Kerry Katona escapes bankruptcy with Celebrity Big Brother fee

Kerry Katona has managed to escape bankruptcy thanks to her Celebrity Big Brother fee.

The Coming Clean star paid of all her outstanding debts with the £350,000 she received for appearing in the reality show in August.

In doing so, she has now freed herself from a three-year order and can apply for a mortgage and credit cards again.

Friends of Katona told the Sunday Mirror that the 31-year-old is "relieved and proud" to have settled her debts.

"She's really chuffed, and she should be too," they said. "She put her head down, worked hard and done the right thing.

"The ­people in charge of her bankruptcy thought she would blow all her Big Brother money but she handed it over to them to settle her debt. They've made it clear they will not object to any request she makes to the courts to have her bankruptcy discharged."

Katona is said to consider the news "icing on the cake" after getting her divorce from Mark Croft finalised this week.

The reality star accused Croft of squandering most of her fortune, leaving her with debts that at one point totalled £417,000.

Katona, who faced homelessness and was dropped by her agency Can Associates during her bankruptcy, said that she was counting on her Big Brother appearance to improve her finances.