As a very rough guide, all three type of Insolvency – Debt Relief Orders (DROs), IVAs and bankruptcy – wipe out almost all common types of unsecured debt except for student loans. Secured debts are more complicated.
But if one of them looks like it might be right for you, you do need to check if any of your debts won’t be included. The following table and the notes below summarise the different sorts of debts and suggest where you may need to take more advice.
The best places to get advice on these are either your local Citizens Advice, if you would like to talk to an adviser in person or National DebtLine if the phone is more convenient for you.
(1) Debts that were previously secured (eg if the car has been repossessed or you have handed back the keys to the house) are included as normal unsecured debts.
(2) You aren’t eligible for a Debt Relief Order if you own a property
(3) Secured debts (mortgages, secured loans) are included in bankruptcy. But that doesn’t mean you suddenly own your house with no debt… The lender has your house as “security” if you don’t make the debt repayments and that security still legally exists. As a result you have to keep paying the mortgage or loan if you don’t want the lender to repossess your house.
(4) You need to discuss any HP arrangements with the person that is arranging your DRO
(5) Student Loans do not include career development loans that you may have borrowed from a bank – these are normal loans and can be included
(6) Rent arrears may be included, but your landlord may still be able to evict you so you need to take advice
(7) you may still have to make some repayments before you are discharged – but benefits overpayments are eventually written off.
(8) Magistrates court fines (eg driving offences), debts owed as the result of a Personal Injury claim against you, court-ordered maintenance arrears, debts incurred through fraud. Fixed penalty charges (eg parking fines) can be included. Take advice if you are uncertain.
(9) Eg credit cards, store cards, loans, payday and doorstep loans, overdrafts. Guarantor loans can be included too, but it depends if you are the borrower or the guarantor, so read Can guarantor loans be included in DRO / IVA / bankruptcy ?
(11) Rules on council tax keep changing, see this article.