Which Debts are included in Bankruptcy?

Which Debts are included in Bankruptcy?

Generally speaking all the unsecured debts you owe are included in Bankruptcy. Secured debts such as a mortgage are not.

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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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8 thoughts on “Which Debts are included in Bankruptcy?

  1. Viv says:


    How much debt do you have to have to go bankrupt? I owe about £10000 and am wondering if it is for me. I am renting and do not own a car. I an working but only part time so can only afford to make token payments to my debts each month. At this rate they will never be paid.

    1. Hi Viv

      There is really no minimum or maximum amount of debt that you have to owe to go bankrupt. Bankruptcy might be suitable if you have debts of as little as £5ooo. However it really depends on your wider circumstances.

      You say that you do not have any assets (you are not a home owner and do not own a car). Given you owe £10000 and cannot afford to make any repayments bankruptcy would be a good solution for you. Your debt would be taken away from you and if you have no surplus income you would not have to make any further payments towards it. You would be dicharged after a year.

      That said the one issue you will face is the up front cost which you might struggle to pay.

      For this reason I would suggest that you look into the possibility of a Debt Relief Order (DRO). A DRO will give you the same outcome as bankruptcy but the up front cost is much lower. It is specially designed for people with no assets, debt of less than £20k and little or no surplus income.

  2. Helen says:

    Are charging orders included in a bankruptcy?

    1. Hi Helen

      A charging Order secures the associated debt against your property. As a secured debt it can no longer be included in bankruptcy. If you go bankrupt this debt would not be written off and would still have to be paid.

  3. Liz says:

    The council said I was over paid housing benefit because I had my children’s saving in an old account. I didn’t think it mattered as they can see I don’t live a great life style. They sent me a bill for 12000 and stopped my benefit. This is on top of £7000 debts I already have

    I work part time because my son is disabled so I only get 60-90 pounds a week. I am using my sons dla to try get by too. Also am getting evicted because I can’t pay the rent as it’s 750 a month.

    Would my housing benefit debt get wiped out if I went bankrupt? Also would I lose my bank account?

    1. Hi Liz

      Housing benefit overpayments are written off in bankruptcy (as long as they are as a result of a mistake and are not as a result of fraud). Having said that if you still qualify for this benefit after you go bankrupt it can be held back by the council to off set against the debt owed until you are discharged after 12 months.

      In addition if you now have rent arrears this debt would also be included in the bankruptcy and written off.

      In terms of your bank account you can have an account if you go bankrupt but it must be a basic account rather than a current account. If the account you are using at the moment is a current account you would need to speak to your bank about switching to a basic one. If you owe your bank money then you can open a basic account with a different bank and this would remain open while you are bankrupt.

      Note: From what you have said your total debt including the benefit overpayment is around £19,000. Given it is less than £20,000 it looks to me as though you would qualify for a Debt Relief Order. This would give you the same benefits of bankruptcy but only costs £90 to implement compared to £680 for bankruptcy. As such I recommend that you also investigate this option.

  4. Amber says:

    I hope you can help me. I have lost a case in ET and have to pay to the claimant nanny 11k. I am single parent working but earning not the best money. I am unable to pay this. On top I have debt of 2k on my Credit Card. If I file to County Court for changing the amount I am able to pay could I later go for DRO? Is ET debt to private person included in DRO? Thanks

    1. Hi Amber

      By “ET” I assume you mean employment tribunal? It is possible to apply to the Court to vary the payment you have been ordered to pay as a result of this. You would need to complete a form known as N245. If you are successful the court will allow you to pay the amount owed in affordable instalments.

      Even if you successfully vary a Court Order this does not stop you from applying for bankruptcy or a Debt Relief Order later on if you wish. Debts owed as a result of an employment tribunal can certainly be included in either of these solutions.

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