It is believed Riise has ended up with huge debts in his name, although he insists it is without his knowledge.
A source, close to Riise, said: There was a bankruptcy order issued, but it was an oversight which should have never ended up in court.
His lawyers are working on this case as a matter of urgency and they are confident the situation can be resolved in the near future.
The order was made in Liverpool on Tuesday, but Riise was not present, and it is said that he knows very little about his former agents claim.
Details of Riises bankruptcy are now officially listed, giving the players last known address in Liverpool.
The case is linked to a separate fraud action which Riise is pursuing against the former agent through the Norwegian courts.
It is believed the defender is claiming around £37 kroner (£3.1) from Mr Baardsen, who denies the allegations.
Newspaper reports have claimed that Riise is claiming money that was allegedly taken out in loans unauthorised by him, but taken out in his name.
One article claimed Riise had privately admitted signing documents on Baardsens recommendation without checking the small print.
Speaking to a Norwegian newspaper, last month, Riise said: I trusted him {Baardsen} and was shocked when I found out what had happened.
Now I have good people around me that will help me out of this. Maybe this can be a warning to other young footballers.
The dispute will not affect his position with the Reds in any way.
Riise has now signed up with the renowned agent Straun Marshall, from the SFX management company, who also represent Steven Gerrard.
A spokesman for Liverpool Football Club said: We are not going to comment as this is a private matter.