Rent arrears debt can be included in bankruptcy. However, you need to understand the implications. This is particularly relevant if you rent from a private landlord.
Included in this article:
- Can rent arrears be included if you go bankrupt?
- What if you rent from the council or housing association
- Potential issues if you rent from a private landlord
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Can rent arrears be included if you go bankrupt?
Any rent arrears you owe are included if you go bankrupt. They are treated in the same way as your other unsecured debts such as credit cards and loans. In effect they are written off.
Your arrears may be from an old property where you no longer live. Alternatively, they may be owed to your current landlord. It does not matter
However, only arrears are included. Any rent payments you miss after the date you go bankrupt will not be written off. You will still have to pay these. You could face eviction of you don’t.
It is for this reason that you must keep up with your ongoing rent payments once you are bankrupt. You should include a sufficient amount in your monthly living expenses budget to allow you to do so.
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What if you rent from the council or housing association
One of the main concerns you may have about rent arrears owed to your current landlord, is how they will react if you go bankrupt. Will you be at risk of eviction?
Where you are renting from your local council or housing association, you shouldn’t have to worry about this.
It is unlikely that a social landlord will evict you from your property once you are bankrupt (whether or not you have rent arrears). This is because their decision to allow you to rent one of their properties is not based on your credit score or social circumstances.
That said, you must make sure you pay your rent on time each month (or week) after you have gone bankrupt.
Your bankruptcy will not protect you if you get into arrears again. You might also face eviction unless the debt is repaid.
Potential issues if you rent from a private landlord
Where you have rent arrears with your current private landlord, you need to be more careful.
Once you are bankrupt, it is unlikely that they will be able to recover any of the arrears that you owe. As a result, the possibility that they could evict you from your home is much more likely than with a social landlord.
You might think that a way around this would be to leave the arrears you owe them out of your bankruptcy. You could then set up a separate plan to pay them back. However, this will be a problem.
Setting up a separate repayment plan with your landlord is difficult. The reason for this is that you will not be allowed to include an amount to make payments to them in your bankruptcy living expenses budget. You would have to try and make savings from your other allowances and use this money to repay them.
In addition, if the Official Receiver finds out you have rent arrears, they will contact your landlord. They will inform them of your bankruptcy and that the arrears can no longer be collected.
For this reason, it is generally sensible to pay off any arrears you owe to a private landlord before you go bankrupt. To achieve this, you may need to reduce the amount you have to pay towards your other debts, perhaps by using a temporary debt management plan.
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2 thoughts on “Rent arrears and bankruptcy”
i’m bankrupt but i am going to court on 9th may for a possession hearing. i know i will be evicted, but will i have a money judgment against me too?
I assume you have rent arrears and that is why your landlord has applied to repossess the property?
Any rent arrears that built up before the date you went bankrupt are included in your bankruptcy. Your landlord can’t take action against you to enforce these debts and you will not have to pay them.
However, you are liable for and will have to pay, any arrears which have built up and claimed by your landlord since the date of the bankruptcy. The landlord can take enforcement action against you to collect this debt.