Does Going Bankrupt Clear All Debts?
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If you are facing bankruptcy, it is essential that you go in to the process with your eyes open to the impact it could have on your future. That includes knowing which debts you may still be facing during the bankruptcy or after it has finished.
Most debts will be covered by your bankruptcy and will be written off or offset against your assets.
However there are some debts that you will need to pay once your bankruptcy ends, so it’s essential that you consider what these will be and plan for how you will pay for them.
The debts will include:
- Magistrate court fines
- Any payments made under a confiscation order
- Any maintenance or child support payments
- Student loans
- Debts accrued as a result of injury or death to another person
- Social fund loans.
If you have been allowed to keep your home, then you will have to continue making any mortgage payments that you may have. However, if you have fallen behind with your mortgage payments, your bankruptcy will not stop your mortgage lender from being able to repossess your property.
If your house has been repossessed as a result of your bankruptcy and sold, but doesn’t raise enough money to cover the outstanding debt, then the remaining balance is known as a ‘mortgage shortfall’. This will become an unsecured debt which you will be released from, once your bankruptcy period has ended.
For more information about Bankruptcy, take a look at our Bankruptcy pages