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Debts that bankruptcy covers

Going bankrupt can mean that many of your debts will be written off. However, bankruptcy doesn't cover all debts so it's important to make sure you know whether any of your debts won't be covered and put plans in place to deal with them.

This page explains which debts are covered by bankruptcy and what you can do about the debts that aren't.

Top tip

If you're facing bankruptcy, you'll need expert advice. You can get advice about your debt problems and bankruptcy from your local Citizens Advice bureau.

To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.

Which debts are included in bankruptcy?

Most debts that you have when a bankruptcy order is made will be covered by your bankruptcy. This means they will automatically be written off at the end of the bankruptcy period.

However, not all types of debt are written off. The people you owe these debts to can still take action to get their money back. This means that before you apply for bankruptcy you should work out how you'll deal with any debts that aren't covered.

Debts that are not automatically written off

Debts that aren't automatically written off include the following:

  • magistrates court fines
  • any payments a court has ordered you to make under a confiscation order, for example, for drug trafficking
  • maintenance payments and child support payments, including any lump sum orders and costs that have arisen from family proceedings, although you may be able to ask the court to order that you don't have to pay this debt
  • student loans
  • secured loans and other secured debts, such as debts secured with a charging order
  • debts you owe because of the personal injury or death of another person, although you may be able to ask the court to order that you don't have to pay this debt
  • social fund loans
  • some benefits and tax credits overpayments.

Is your mortgage covered by bankruptcy?

Bankruptcy won't stop your mortgage lender from taking steps to repossess your home if you're behind on your mortgage. However, if your home is repossessed and sold, but doesn't raise enough money to pay off your outstanding mortgage or any other debt secured on it, the remaining debt will no longer be secured. This means you'll be released from it at the end of your bankruptcy. You'll also be released from it even if your home is sold at any time after your bankruptcy has ended.

Debts you took out by fraud

If you took out any of your debts by fraud, your creditor can't chase you to pay while you're bankrupt, but they won't be written off at the end of the bankruptcy period. This means you'll still be liable for paying debts you obtained by fraud after you've been discharged from bankruptcy.

Debts in joint names

If you owe debts jointly with someone else, you can include these in your bankruptcy. However, the creditor would then be able to chase the other person for the whole of the amount that is owed. They can do this whether the person is working or not.

You and the other person can each apply for bankruptcy individually, which would cover the joint debt. You will each need to pay a fee and a deposit separately. You can't jointly apply for bankruptcy.

Business debts

If you have business debts that were taken out in a partnership, you can make a joint application for bankruptcy as long as all the partners agree. If you're thinking about doing this, you should take specialist advice.

Next steps

Further help

If you're trying to cut your spending or are having trouble keeping up with payments, see our advice on getting help with bills. Use our budgeting tool to see exactly where your money goes each month.

More information

►'Dealing with debt - how to wind up a partnership' from the Insolvency Service at www.bis.gov.uk

Business Debtline (BDL) is a charity which offers free, impartial and confidential advice to businesses in financial difficulty in the UK both on its website and by a helpline.

Business Debtline
Freephone: 0800 197 6026 (Monday to Friday from 9am to 5pm)
Website: www.bdl.org.uk

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