What happens if you have already gone bankrupt but forgot to include one of your debts on your application? Can you add a debt later on?
Included in this article:
- What happens if you discover a forgotten debt after you go bankrupt?
- Can a mortgage or car finance shortfall be added later?
- Implications if you take on a new debt while bankrupt
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What happens if you discover a forgotten debt after you you go bankrupt?
You should try and list all the organisations and people you own money to in your bankruptcy application form. However you don’t have. In law (S382 of the Insolvency Act 1986), once you are bankrupt all your unsecured debts are automatically included whether you listed them or not.
This incredibly helpful. It means if you forgot to add a debt when you completed your form, it is still included and bound by the bankruptcy. All you need to do is contact the Official Receiver (OR) managing your case. They will then deal with the creditor on your behalf.
If you are chased for a debt that you did not know you owed, again all you need to do is contact the OR. They will get in contact with this creditor. You can also tell the creditor that you are bankrupt and send them a copy of your bankruptcy order. They should then update their system and stop contacting you.
If you are unsure about whom you owe money to or think that you may have forgotten someone, the best thing to do is get a copy of your credit file. Most, if not all of your unsecured creditors will be listed on your file. You can then refer to this list when completing your application.
Can a mortgage or car finance shortfall be added later?
Mortgage shortfall debt is unsecured and can be included in bankruptcy. If your property has been repossessed and you still owe the mortgage company money, it will be written off if you go bankrupt.
If a property you own is repossessed after you go bankrupt, any subsequent shortfall is still written off by your original bankruptcy. You don’t have to go bankrupt again as long the mortgage product was not changed in the mean time. It is simply added to the list of debts included.
Car finance is treated in the same way. You are often allowed to keep a car on finance after you have gone bankrupt (as long as you maintain the payments). However if decide to hand the vehicle back to the finance company, any shortfall on the agreement is then included.
Mortgage and car finance shortfalls are known as contingent debt. They can be included because you were already potentially liable for them on the day you went bankrupt.
Implications if you take on a new debt while Bankrupt
Borrowing more will be difficult due to your poor credit rating. However it is possible to get into new debt. There are some companies who might still lend to you such as payday loans.
In addition you might fall behind with utility payments such as gas and electricity. You will be liable to pay these balances.
You should not borrow more money while you are bankrupt. Legally you are not allowed to without first telling the organisation or person you are borrowing from about your situation.
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