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What is bankruptcy

Which debts are included in a bankruptcy?

Bankruptcy writes off many types of debt, such as credit cards. You need to pay any debt that cannot be written off. The person who handles your bankruptcy will confirm what is included.

Some debts included in bankruptcy are:

  • Credit cards
  • Utility arrears
  • Store cards
  • Overdrafts
  • Catalogue
  • Benefit overpayments (if they are not fraudulent)

If you forget to put a debt on your application:

  • Tell the official receiver or trustee looking after your bankruptcy
  • They will check if it can be included

The rules around debt relief orders (DRO) have changed. These changes could help people considering an insolvency solution like bankruptcy. A DRO will now be a cheaper alternative to full bankruptcy for some people.

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Which debts are excluded from bankruptcy?

The following debts are not cleared by a bankruptcy. You need to keep paying these.

  • Child maintenance arrears, if the arrangement was set by the Child Maintenance Service
  • Criminal fines, compensation orders and victim surcharges from a magistrates’ court or crown court
  • Debts you take out after the date of your bankruptcy order
  • Debts taken out fraudulently, for example benefit fraud
  • Mortgages and other debts secured against your home if you want to keep the house
  • Social Fund loans
  • Student loans
  • TV Licence arrears
  • Court orders telling you to pay compensation to someone for personal injury
  • Payments ordered by a court as part of family proceedings or divorce cases

Apart from a few other rare exceptions, all other debts are written off by bankruptcy.

Are any secured debts included in bankruptcy?

Hire purchase

Finance companies often cancel hire purchase or logbook loan agreements when you go bankrupt.

  • The debt is included in your bankruptcy
  • You have to return the goods or vehicles in the agreement

In some cases you may be allowed to keep the goods, but you have to keep paying the debt.

Mortgages and secured loan debts:

These are included if:

You need to keep paying these as normal if you stay in your home.

Are joint debts included in bankruptcy?

A joint debt is one that:

  • Two people applied for at the same time
  • Both people are named on the credit agreement

Joint debts are not written off unless the other person is also going bankrupt.

You do not have to pay them but:

  • The debt becomes a debt in the other person’s name only
  • This means they are responsible for paying off the remaining amount in full

If you have any joint debts, you should think carefully about how this would affect the other person before you decide to go bankrupt.