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Can you leave debt out of bankruptcy
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Can you leave debt out of bankruptcy

Can you leave debt out of bankruptcy

Most unsecured debts have to be included if you go bankrupt. This means careful thought is needed if you have joint debts or a guarantor loan.

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Can you choose to leave debt out of bankruptcy?

As a general rule, you can’t decide to leave debt out if you go bankrupt. All the unsecured debts you owe have to be included.

Even if you don’t list them all on your application, inclusion is automatic. If you leave one out by mistake or aren’t sure what you owe, it doesn’t matter. Any that you forget or you weren’t even aware of are still included and written off when they come to light.

That said some debts are not included. For example pay monthly mobile phone contracts. You are allowed to keep paying for your mobile phone as normal.

In addition you do not need to worry about utility bill accounts or car insurance you pay monthly. These are not affected.

Secured debts such as mortgage debt or car finance are not included in bankruptcy unless there is a shortfall after repossession.

Can you leave out a joint debt or guarantor loan?

Joint debts or guarantor loans (given they are unsecured) must be included if you go bankrupt. It is not possible to leave them out. Because of this, the joint account holder or guarantor will be left liable for the outstanding debt.

You will therefore have to think very carefully before going bankrupt if you have these types of debts.

If the joint account holder or guarantor is unable to take over the ongoing repayments, the creditor will start collections action against them.

Where the joint account holder or guarantor is your partner, you could both consider going bankrupt. Alternatively they could use a different debt solution more suited to them.

Thinking about going bankrupt but want to leave debt out? Contact us for advice. Call 0800 044 3194 or complete the form below

What about money owed to family or friends?

Money owed to family or friends is one of the few debts that can be left out of bankruptcy.

You may want to exclude these because you don’t want them to know about your circumstances and that you are going bankrupt. Alternatively you may want or need to keep paying them.

The good news is if you don’t list them on your bankruptcy application, they won’t be identified or contacted by the official receiver.

However, once you are bankrupt, you can’t officially continue making payments towards these debts. The official receiver will not allow you to include any money in your living expenses budget to cover the payments. You will need to suspend them until after your bankruptcy is over

You can continue to pay family or friends after your bankruptcy is over. But trying to maintain then while you are bankrupt will be very difficult.

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James Falla
I have been advising people on how to solve their debt problems for over 20 years. During this time I have helped many people go bankrupt. I am an FCA Approved Person and the Managing Director of Wilmott Turner Financial Services (owner and operator of Bankruptcy Expert
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