She has been living with the burden of bankruptcy for three years now.

But embattled Kerry Katona has finally freed herself from her enormous debts following her stint on this year’s Celebrity Big Brother.

The 31-year-old used money from her hefty £350,000 appearance fee to settle the remainder of her debt, which at one point reached £417,000

The Sunday Mirror reports that the mother-of-four can once again apply for a mortgage and credit cards after paying off the money she owed collectors recently.

A friend of the star told the paper: ‘She’s really chuffed. 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.’

Katona also appeared on the last season of Dancing On Ice to supplement the income she receives from her weekly magazine column.

Katona split from her management at CAN Associates, who used to help pay her £3,500 a month rent, in June.

In 2008 Katona was declared bankrupt despite reportedly earning £75,000 a year as the face of supermarket chain Iceland and £400,000 a year as a columnist for OK! Magazine.

Katona was dropped from her lucrative Iceland contract in 2009 following her drugs scandal.

At one point her fortune was estimated to be £6.8m but extravagant spending reportedly reduced this significantly.

She married taxi driver Mark Croft in February 2007 and reportedly bought him a Ferrari, two BMW’s, two Range Rovers, a Lamborghini, four Porsches, two Aston Martins, an Audi and two superbikes worth an estimated £1.5m.

Following their split at the beginning of 2010, Croft publicly declared he had ‘bled her dry’. Katona told This Morning that she had initiated a police investigation into what happened to her fortune during her marriage to Croft.

Source: Daily Mail