Can I go bankrupt if my debt payments are up to date
- 07 Dec 2021
Your debt payments may be up to date, but what if you are struggling and know you cant keep keep paying for much longer? You can go bankrupt in these circumstances.
Included in this article:
- Are you allowed to go bankrupt if your payments are up to date?
- If you were paying some debts and not others is it fraud?
- Do you have to continue paying towards your debt?
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Are you allowed to go bankrupt if your debt payments are up to date?
Where your debt payments are up to date, it looks like you can afford to pay what you owe. But what if you know that you are actually struggling? You know you are using one form of credit to pay another and need a solution to get out of debt?
In these circumstances you may be worried that you won’t be allowed to go bankrupt. You might think your application will be rejected because on paper it looks like everything is OK. Rest assured, you can go bankrupt and write off your debt if you are in this situation.
When assessing your application, the most important factor is whether or not you are insolvent. Are you unable to pay your debt without borrowing more? Reviewing your income and expenses budget will show this is the case. It will be clear that you do not have enough surplus income to maintain all your payments from just the money you have coming in.
It will be obvious that the only way you have kept your payments up to date is by using credit. Going bankrupt to stop this, and prevent the debt from getting any worse, is seen as a positive step.
If you were paying some debts and not others, is it fraud?
What will happen if you have been keeping up with the payments to some of your debts but have missed others? Some of your accounts are therefore up to date and others in arrears.
Perhaps you have only been maintaining the payments you have been making by using credit.
Where this is the case, you may be concerned that you could be accused of fraud. But there is no need to worry. It will not be held against you once you are bankrupt and is certainly not considered fraud.
It is actually quite common for someone who goes bankrupt to have arrears with some accounts and not others. In the past you may have kept paying the ones which shouted loudest or charged the highest interest rate.
The Official Receiver will recognise that you have been trying to do the right thing by struggling on and hoping things will get better. But sometimes things just don’t get better and you just run out of time.
Going bankrupt if you have kept up with some debt payments and not others is not fraud. You will not be treated any differently to someone who is behind on all their account payments.
Do you have to continue paying towards your debt once you are bankrupt?
Where your payments are up to date, will the official receiver think you can continue paying your debts after you go bankrupt? The answer is no. One of the great advantages of going bankrupt is you do not have to make any further payments unless you can afford to.
If your income and expenses budget clearly shows you have nothing left after all your reasonable expenses are accounted for, you will be told to stop making your payments. If your your income stays the same and nothing changes by the time your bankruptcy finishes (after 1 year), your debts are just written off. You will never have to pay them.
You will only ever have to pay towards your debts if you have surplus income. Where this is the case, you will have to pay this in the form of an IPA (Income Payment Agreement) for 3 years. After that the payments stop and any remaining debt is written off.
Want free, no obligation advice about whether bankruptcy is the right debt solution for you? Call us (0800 044 3194) or complete the form below.