Add Debt during Bankruptcy
You can add debt to bankruptcy which was not included in your original application. However only if it was incurred on or before the start date.
- Can you add forgotten debt to your bankruptcy?
- Adding a mortgage shortfall after bankruptcy
- What about debts borrowed after the start date?
- What if your creditors continue to chase you?
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Can you add forgotten Debt to your Bankruptcy?
When you complete your bankruptcy application you will be asked to list all of your unsecured debts. However you may not be sure exactly who you owe money. This can often be the case if your accounts have been passed to debt collectors or sold on.
Do your best to list as many creditors as you can. This will ensure that the Official Receiver is aware of them and can write to them confirming you are bankrupt.
However if you cannot remember them all it is not a major issue. In accordance to section 382 of the Insolvency Act they are included whether you listed them or not. If a new debt comes to light after you are bankrupt you simply need to inform the Official Receiver. They will deal with it for you in the same way as if it had been included on your original application.
If you cannot remember all the people you owe money to one option is to get a copy of your credit file. This should list many if not all of your outstanding accounts.
Can you add a Mortgage Shortfall after you go Bankrupt?
If you go Bankrupt the unsecured debt that you were liable for on that date is included. In addition any debt that you could become liable liable for is also included. This is a very specific area of the Bankruptcy rules. It is particularly useful if a property you own is likely to be repossessed.
At the time you go bankrupt you may have a mortgage. If at some later date the property is repossessed and there is a mortgage shortfall this debt becomes unsecured. It is then included in your Bankruptcy. This rule applies if your house is repossessed after you have been made bankrupt as long as your mortgage has not changed since that date.
The only time that a subsequent mortgage shortfall will not be included in your bankruptcy is if you have changed your mortgage after the date you went bankrupt. This then means that this specific mortgage debt did not exist at the time you went bankrupt and so can not be added.
What of you borrow more while you are Bankrupt?
While you are bankrupt it will be difficult for you to borrow more. This is because your credit rating will be poor. However you may still be able to get a cash loan from a Payday or Doorstep lender.
It is important to understand that any new money that you borrow after the date of your bankruptcy cannot then be included in the arrangement. You will remain personally liable to pay this. The creditor can take further legal action against you to enforce the debt if it is not paid.
BE Tip: If you are struggling financially while bankrupt you should speak to your Official Receiver. If you are paying an IPA it may be possible to suspend the payments. You should not borrow more money. If you do it is highly likely that you will be unable to repay it and you will get into even more difficulty.
What if your creditors continue to chase you once you are Bankrupt?
Once you have been declared bankrupt the Official Receiver will write to all your known creditors confirming that you are bankrupt and that they should stop their collection activities. However one or more of them may continue to chase you for money.
This might be because the letter that the OR sent did not get through to the right place. Alternatively the OR may not be aware that you owe the money because you did not add the creditor to your original list. If this happens you simply need to inform your OR who will deal with them on your behalf.
BE Tip: If a creditor demands money from you after you are bankrupt you should always tell them you are bankrupt. They must then deal directly with the Official Receiver. You must never make any payment to such a creditor directly. This is not allowed. They can only receive payments via the OR from now on.
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