Shane spent "months" working with a team of financial experts to help him get out of trouble, but he has now been ruled officially bankrupt at Kingston County Court, Surrey.
The 32-year-old star - who had to sell his Aston Martin for £322,000 - said: "Together with a team of financial and legal experts I have spent months exploring all possible alternatives to bankruptcy but to no avail.
"I have worked long and hard to try to reduce my debts, and I am devastated that it came to this conclusion.
"I now intend to focus on the remaining dates of the Westlife tour and my commitments to the band before looking to rebuild a future for my wife, my three children and myself."
Shane is dealing with his plight at his and Gillian's home in Surrey, and his bankruptcy will only last for one year in England, provided he complies with the courts, compared to 12 years in Ireland.
The singer's financial downfall came after his and his brother Finbarr's company Shafin Developments borrowed millions from Bank of Ireland and Ulster Bank during the economic boom with a view to constructing a 90-home estate in Dromahair, County Leitrim - but only 50 houses had been built when the site was recently inspected.
Other projects including a nursing home and supermarket in Ireland have also been stopped.
Shane is due to continue singing at Westlife's farewell tour - which is expected to net him £4 million - with farewell gigs in Dublin, Ireland, next week before he starts a solo career, which will be managed by 'X Factor' judge Louis Walsh, who believes the Irish star will "make millions" from the project.
He is quoted by the Daily Mirror newspaper saying: "Shane is going to have a massive career after Westlife. He's going to have a great solo career and make millions. He'll start all over again and remake the riches in no time at all."