Introduction
Are you considering bankruptcy and feeling overwhelmed by your financial situation? This guide will help you understand which debts you still need to pay and how to navigate the complexities of bankruptcy. It’s crucial to know your rights and obligations during this challenging time. If you need assistance, Contend’s highly trained AI legal experts are here to provide guidance and support, making it easier for you to resolve your legal issues. Discover how to manage your debts effectively and regain control of your finances with Contend, the Easiest Legal Help in the UK.
If you’re considering bankruptcy, it’s important to know that while it can help relieve you from most debts, not all debts are covered. Understanding which debts you still need to pay is crucial in managing your financial situation during this challenging time.
What Happens in Bankruptcy?
When you declare bankruptcy, you are generally released from the responsibility of paying most of your debts. However, there are specific types of debts that you must continue to pay, and others that may require different handling. Here’s a breakdown:
Debts You Still Need to Pay
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Student Loans: You are still responsible for repaying your student loans even if you declare bankruptcy.
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Child Support and Maintenance Payments: Obligations related to child support or maintenance must be paid. In some cases, you can ask the court to modify these payments, but they typically remain your responsibility.
- Court Fines and Confiscation Orders: Any fines from a magistrate’s court or payments ordered under a confiscation order must still be paid.
- Debts from Personal Injury or Death: If you owe money due to causing personal injury or death to someone else, you usually cannot include this debt in your bankruptcy.
Secured Debts and Mortgages
If you have a mortgage or any debt secured against your home, you must keep making those payments. Failing to do so could lead to your home being repossessed, which bankruptcy won’t protect you from. If you’re struggling, communicate with the official receiver about your financial situation to see if you can adjust your payment plan.
If your home is sold for less than what you owe on the mortgage, the remaining debt (known as a mortgage shortfall) may be wiped out at the end of your bankruptcy.
Rent Arrears
If you owe back rent, this will be included in your bankruptcy, but your landlord may still seek to evict you. It’s essential to create a plan to manage these arrears if you want to maintain your tenancy.
Hire Purchase Agreements
If you have items on hire purchase, you need to check with the official receiver about your payment obligations. If you want to keep the items, you should arrange to continue making payments. Be aware that some lenders might reclaim the items if you declare bankruptcy, even if you keep paying.
Debts to EU Creditors
If you owe money to creditors in the EU, bankruptcy can complicate things. If you live in the UK, EU creditors must pursue claims in UK courts. However, if you live in the EU, they may still take action in their local courts. Seeking legal advice is a good idea if you find yourself in this situation.
What Happens After Bankruptcy?
Once your bankruptcy period ends, some debts may come back into play. For example, if you had a benefit overpayment, the Department for Work and Pensions (DWP) might resume deductions from your benefits if they suspect fraud.
If you provided incorrect information to obtain credit, this could also affect your financial obligations after bankruptcy.
Joint Debts and Guarantor Situations
If you have joint debts with someone else, you can include these in your bankruptcy. However, the other person will still be responsible for the entire debt. If you’re both in a partnership with business debts, you may be able to file for bankruptcy together, but it’s best to seek specialized advice.
If someone guaranteed a loan for you, that debt will be included in your bankruptcy, but the guarantor will still be liable.
Adding New Debts
If you incur new debts after declaring bankruptcy, you generally cannot add them unless they are related to something that occurred before your bankruptcy was filed.
Final Thoughts
Navigating bankruptcy can be complex, but understanding your obligations can help you manage your finances better. If you’re unsure about your situation or need assistance, consider trying Contend’s legal expert chat for guidance. Contend’s highly trained AI legal experts will work with you to help you understand and resolve your legal problems.
For more information on bankruptcy and debts, you can check out resources like GOV.UK or Business Debtline.
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