Debts Included in Bankruptcy

The current issues with the economy have resulted in more people taking on credit cards and loans order to meet the daily costs of living. For many, this is a manageable debt, but for some, repaying this debt has become a struggle. There are a number of solutions available to those individuals, but if none of them are suitable, Bankruptcy may be the only course of action left to take.

What can be included:

• Unsecured debt. As a general rule of thumb, any unsecured debt can be included within the bankruptcy.
This could include:
• Overdraft facilities.
• Credit cards.
• Unsecured personal loans.
• Payday loans.
• Store and catalogue cards.
Tax debt.It is also possible to include any outstanding debt owed to the HMRC and the council, for example:
• Unpaid income tax.
• VAT.
• Council tax arrears (this cannot include the current year’s council tax bill).
Utility bills. It is also possible to include any outstanding utility bills within the bankruptcy.
Hire purchase (HP). This would be possible to include on any goods no longer required (for example, a car). It would need to be no longer needed as an HP agreement, or loan, is effectively secured on the item purchased. If the debtor defaults on the agreement, then the item will be repossessed.

What cannot be included:

Secured debt. This would involve any loans or debts that are secured against a property. The most obvious being a mortgage. In the event of bankruptcy, it is likely that any property owned will need to be sold in order to raise funds to repay creditors.
Council tax for the remainder of the current year.
Child support and/or maintenance.
Student loans.Student loans.
Personal injury claim debt.
Court fines.Court fines.


As with any debt solution, it is important to seek advice from a licensed Insolvency Practitioner, or money lender, or from one of the non fee charging services available, such as the Citizens Advice Bureau (CAB), National Debtline or the Consumer Credit Counselling Service (CCCS). They will be able to establish what debts can be included if there is any confusion. It may also be that there is a more suitable alternative such. An Individual Voluntary Agreement (IVA) which could protect the individual if they are a homeowner.

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