Bankruptcy is the legal proceeding that takes places when an individual cannot pay their outstanding debts. It does not apply to companies or partnerships. The process of bankruptcy makes sure your assets are shared among your creditors. After, with some restrictions, you are able to have a fresh start free from debt.
Some debts that can be cleared by bankruptcy are credit cards, utility, store cards, overdrafts, catalogue and benefit overpayments. These debts are individual debts and can be written off when you are bankrupt. However, joint debts like when there are two people named on the credit agreement cannot be written off as easily. If only one person from the joint debt is looking to go bankrupt, then the debt moves into the other person’s name, and they become solely responsible for paying the amount in full. So, the debt has not be written off, but you no longer have to pay it. Though, if both parties from the joint debts are going bankrupt then the debt can be written off.
Not all debts are cleared by bankruptcy in the UK. In fact, there are still a few that are excluded. One of the debts that is excluded is child maintenance. If an agreement has been set up by the child maintenance service, then you still must continue making payments even when bankrupt. This is the same for criminal fines. If you have been fined from magistrates’ court or crown court which might be in a form of a victim surcharges or compensation orders, then you still must continue to make payments and clear this debt. Other debts that are excluded include: social fund loans, mortgages, student loans, Tv Licence and Family proceeding in courts or divorce cases.
The short answer is yes. This is because bankruptcy does not clear any mortgage debts, or any other debts secured against your home. So even when bankrupt you must keep up with these payments. If you choose or cannot keep up with these payments, then the mortgage provider can repossess your home. It is important to know that you cannot lose your house because of bankruptcy but can lose it if you fail to repay your debt whilst being bankrupt.
If you require any legal advice regarding bankruptcy or debt, then please don’t hesitate to call Summerfield Browne.
