The ex-Scotland captain was declared insolvent after failing to settle large bills thought to be owed to the taxman.
He is one of a number of former Ibrox stars who faced paying back money they had received in Employee Benefit Trusts (EBTs) after Rangers lost a battle with HMRC at the Supreme Court earlier this month.
Ferguson, 39, who recently stepped down as manager of Clyde, received £2.5 million in EBT payments.
He also invested in a film production partnership called Eclipse which has targeted by HMRC after being ruled to be a tax avoidance scheme.
Ferguson had a glittering career which included captaining Rangers to a host of honours. He also had spells in the English Premier League with Blackburn Rovers and Birmingham City.
He applied for his own bankruptcy after running up debts of £1,425,633 and it was approved by the Accountant In Bankruptcy, Scotland’s insolvency service, earlier this month.
A bankruptcy trustee, Maureen Leslie of Glasgow-based insolvency specialists MLM Solutions, has been appointed to take control of his assets and try to recover money owed to creditors.
Ferguson, who lives in a gated mansion near Larkhall, Lanarkshire, has declared that he has only £3,000 worth of assets available to help pay off his creditors.
The so-called Rangers ‘big tax case’ centred on the use of EBTs. More than £47million was paid to players, managers and directors between 2001 and 2010 in tax-free loans.
Earlier this month judges found that ‘loans’ paid to players and staff were in fact taxable earnings, in a decision that brought to a close legal proceedings that have dragged on for years.
HMRC said the ruling proved the EBT scheme was ‘contrived’ in that it presented payments as ‘loans’ rather than earnings, amounting to ‘tax avoidance’.
Ferguson was previously listed as a director with Eclipse Film Partners No.9, a scheme which allowed investors the opportunity to claim tax relief through investing in the production of movies.
In April last year, the Supreme Court upheld a judgement that one of the biggest partnerships, Eclipse 35, was a tax-avoidance scheme.
HMRC has used that judgement to issue demands to investors, who include several footballers and managers, in the other 38 similar partnerships.
Midfielder Ferguson was capped 45 times for his country and was widely regarded as one of the most gifted players of his generation.
He won the Scottish Premier League, Scottish Cup and Scottish League Cup five times each during his two spells at Rangers.
He was transferred to Blackburn in a £7.5 million deal in 2003 but returned to Ibrox two years later.
After retiring from the game he was appointed manager of Scottish League Two Club Clyde in 2014 but stepped down in February this year. He has recently been working as a football pundit.
Ferguson joins a list of former Old Firm stars who have gone bust in recent years including Chris Sutton, Craig Beattie, Colin Hendry, Rab Douglas, Kevin Drinkell and Bobby Petta.
Former Rangers star Gordon Durie was also declared bankrupt last year with debts of more than £200,000 after investing in a film production scheme.