Generally speaking all the unsecured debts you owe are included in Bankruptcy. Secured debts such as a mortgage are not.
- The Debts which are included in Bankruptcy
- Are CCJs and debts owed to HMRC included?
- Which Debts will not be written off?
- Can debts be added after you go Bankrupt?
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Which debts are included in a Bankruptcy?
Most of your unsecured debts are included in Bankruptcy. Can Tax and VAT debt be included? What happens to secured debts like your mortgage? Which unsecured debts are left out? To find out more please visit: http://beatmydebt.com/bankruptcy-frequently-asked-questions/which-debts-are-included-in-bankruptcy
The Debts that can be included in Bankruptcy
If you go bankrupt most of the unsecured debts that you have in your name are included. The kinds of debts which are unsecured are as follows:
Credit Cards Personal Loans Doorstep Loans Pay Day Loans Guarantor Loans
Catalogue Debts Store Cards Bank Overdrafts County Court Judgments (CCJs)
- Outstanding balances after home or vehicle repossession
- Business loans for which you are personally responsible
- HMRC (Tax / VAT) debts for which you are personally responsible
- Utility bill arrears
- Council tax arrears
- Benefits overpayments (unless they are due to fraud)
- Gambling Debts
You cannot leave any of your unsecured debts out of bankruptcy. Having said that if you owe money to family or friends it could be excluded but you must suspend any repayments until after you are discharged.
Are CCJ Debts and money owed to HMRC included in Bankruptcy?
If you have a CCJ (County Court Judgment) this debt is included if you go Bankrupt. The Judgment is written off in the same way as any other unsecured debt. The same goes for an Attachment of Earnings.
However if a Charging Order has already been issued against your property the debt is now secured. As such it cannot be included and will still have to be paid.
Money owed to HMRC is also included in Bankruptcy. If you have tax arrears or owe VAT or PAYE debts these will be written off by the process.
HMRC debt is not a preferential creditor. As such it is included if you go Bankrupt and the debt written off.
Which debts cannot be included if you go Bankrupt?
Secured debts are not included in bankruptcy. These include things like a mortgage or car HP. You must continue paying these or risk the things they are secured against being repossessed.
Generally speaking you will be allowed to include a sufficient amount in your living expenses budget to maintain your payments towards any secured debts.
There are other specific debts that cannot be written off by Bankruptcy. These include Student Loan Company debts, CSA arrears and Court fines and penalties such as parking and speeding fines.
A Guarantor Loan is an unsecured debt. As such it must be included in Bankruptcy. However the person who has guaranteed the loan then becomes liable to maintain the ongoing payments.
Can Debts be added after you have gone Bankrupt?
Under section 382 of the Insolvency Act 1986 any unsecured debt that you are liable for or may become liable for on the date you are declared bankrupt is included.
This means that if you forget about a debt or you were unaware of one which comes to light later they are still included. If the creditor then demands payment you simple refer them to the Official Receiver.
This rule is particularly useful in terms of mortgage shortfall debt. If you go bankrupt and keep your home but sometime in the future the property is repossessed and there is a shortfall this is still included.
If you take on a brand new debt after the date of your bankruptcy it cannot then be added. You are liable to pay the outstanding amount in full.
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