Generally speaking all the unsecured debts you owe are included in Bankruptcy. Secured debts such as a mortgage are not.
Jump to article contents:
- The debts included in Bankruptcy
- CCJ debts and money owed to HMRC
- Benefits Overpayments
- Which debts will not be written off?
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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 included in Bankruptcy
If you go bankrupt most unsecured debts in your name can be added. These are things like credit cards, personal loans, catalogues and pay day loans.
In addition to other unsecured debts are also included:
Utility & Council Tax Arrears – If you are behind with your council tax or utility bills the arrears you owe will be written off when you go bankrupt.
Parking Charge Notices (PCN) – Any parking fines you have been issued by private parking contractors are written off if you go bankrupt.
Gambling Debts – Debt you have built up because of gambling is included but there may be additional implications depending on the amount.
If you forget to add any of your unsecured creditors in your application they are still included as per section 382 of the Insolvency Act 1986
CCJ Debts and money owed to HMRC and 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. If money is currently being deducted from your wages in respect of a debt this will stop after you go bankrupt.
Money owed to HMRC is also included. 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.
Benefits Overpayments and Bankruptcy
Debts you owe as a result of the overpayment of benefits are normally included in bankruptcy. This is as a result of a Supreme Court ruling in Dec 2011 (Secretary of State for Work & Pensions v Payne Dec 11).
In this case the Court also confirmed that any deductions being made to ongoing benefits to recover overpayments must stop once an individual is declared bankrupt.
The only time benefits overpayments cannot be included in bankruptcy is if they are the result of fraudulent claims.
Once you go bankrupt any benefits payments you receive should return to their normal levels.
Which debts will not be written off if you go Bankrupt?
Secured debts are not included in bankruptcy. These include things like a mortgage, charging order or car HP. You must continue paying these.
A Guarantor Loan is an unsecured debt. As such it must be included in Bankruptcy. However the person who guaranteed the loan will still be liable to pay the balance.
If you owe money in joint names with someone else your liability for this debt comes to an end once you go bankrupt. However the other joint account holder remains 100% liable.
There are other specific debts that cannot be written off by Bankruptcy. These include:
- Student Loan Company debts
- CSA arrears
- Court fines and penalties such as speeding fines
Debts which have been incurred as a result of fraudulent activity are not written off if you go bankrupt. This includes benefits overpaid due to a fraudulent claim.
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