Do I have to make Debt Payments if I go Bankrupt?

Do I have to make Debt Payments if I go Bankrupt?

You may be required to make ongoing debt payments after you go Bankrupt. Whether this is the case will depend on your disposable income.

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How much will I pay each month if I go Bankrupt?

If you go Bankrupt you still have to pay towards your debts if you can afford to do so. What happens if you cannot afford to make monthly payments? How long will any payments you have to make last? To find out more please visit:

Will you have to pay towards your Debts once Bankrupt?

When you go Bankrupt your unsecured debts are taken away from you. However if you have any disposable income you will still have to pay this towards your debts in the form of an Income Payment Agreement (IPA).

If you are asked to pay an IPA the payments will last for 3 years. As such you will continue paying after you are discharged. At the end of the three years the payments stop and you are then free of your debt.

If you have no disposable income you will not be required to make any more debt payments. Given your circumstances do not change your debt will be written off after you are discharged.

If you receive a bonus payment or earn significant extra overtime during an IPA you must report this to the Official Receiver. They will normally take this money from you in addition to your standard monthly payment.

What happens to your Debt Payments if your Circumstances change?

If your financial circumstances change while you are bankrupt you are legally obliged to inform the OR. They will then re-assess your disposable income and determine whether there is any change.

If there is a change and you are already making IPA payments these will either increase or decrease accordingly. Where your disposable income increases and are not already making payments it is likely that these will start.

If you are required to start an IPA part way through your bankruptcy it will still last for three years. You will still be discharged in the mean time but the payments will continue for the full 36 months.

A IPA can be put in place at any time before you are discharged. However if it has not happened by the time you are discharged it will never happen. Any extra you earn after this time is yours to keep.

Do you have to make Debt Payments if you are on Benefits?

There is nothing to stop you going Bankrupt if you are receiving Benefits. If they are your only source of income it is very unlikely that you will be asked to make any further debt payments.

The benefits you receive are calculated to cover only your essential living expenses. They are not designed to allow you to repay debt on top.

Having said that if you are working and receive tax credits in addition to your wages your total income will be taken into account. If you have any disposable income in these circumstances you might be required to start an IPA.

If the benefits you receive are great enough to provide you with disposable income you may be required to make debt payments if you go Bankrupt. However it would be unusual.

Paying debts not included in your Bankruptcy

Most if not all your unsecured debts will be included in your bankruptcy. However some debts are not included and still have to be paid.

A good example of these are mortgages and other secured loans. However they also include CSA arrears, Court fines (such as speeding tickets) and Student Loans Company debt.

A sufficient amount must be included in your living expenses budget to allow you to cover these payments.

You will be personally liable for any debts that you incur after the date you are declared bankrupt. You will have to pay these in full.

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2 thoughts on “Do I have to make Debt Payments if I go Bankrupt?

  1. Sally says:


    I have a quick question about the bankruptcy income and expenses that I’m wondering if you can help with?

    Basically I’ve done household expenditure and then things like fuel/hair/mobile phone- all just for me not my partner. Then it asks me for my partners income. Should I put down his total income or just his contribution to household bills?

    If I put his income, but haven’t added in his personal debts & phone bill etc, then it will look like we have a big surplus when we haven’t? Or do I put down his income & then explain to the OR in the interview?

    Many thanks

    1. Hi Sally

      When you are completing a BK application form you need to do a household income and expenses budget. In other words you must include both your full income and your partner’s full income. Then in the expenses you include all the household expenses including your partner’s personal expenses (mobile, travel costs, housekeeping etc). The only thing you do not include is his debt payments.

      Then you calculate the household disposable income (deduct the total expenses from the total income). This total surplus is then divided between you and your partner as a percentage of the income you both contribute. As such if you both contribute 50% of the income the surplus is split 50/50. Your share will have to be paid into the bankruptcy in the form of an IPA (as described in the above article).

      Your partner keeps his share. He can do what ever he likes with this. If he has his own debts to pay then he can use this to pay these.

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