You may be wondering what types of debt are included in bankruptcy.
What debts are included in bankruptcy?
All unsecured debts are included in bankruptcy.
Unsecured debts include:
- credit card debt
- store cards
- overdrafts
- personal loans
- catalogues
- mobile phone contracts
- utility bill arrears
What debts are excluded from bankruptcy?
The following secured debts are not allowed within a bankruptcy petition unless you are willing to handover the asset to the official receiver.
Secured debts include:
- mortgages and secured loans
- hire purchase agreements
If you have secured debts they will always be affected by your bankruptcy. For example, if you have a car on hire purchase, the finance company are likely to make you return it. The official receiver will also wish you to give them any equity which is in the vehicle so that they can use it to repay your debt.
Joint debts
A joint debt is one that you and another person applied for at the same time. This means that you are both named on the credit agreement.
If you have a joint debt and you go bankrupt, the other person named on the credit agreement will be responsible for paying all of the debt back to the creditor. If you have joint debts you should consider how the other person will be affected if they have to pay the entire amount back by themselves. This is not an issue if you were both to go bankrupt but each of you would need to apply for this using separate applications.