One of the most common questions about personal bankruptcy in the UK is which personal debts can be discharged and which ones can’t. Most of your debts will be discharged if you file successfully for bankruptcy, but there are a few which can’t. It’s much easier to look at the list of debts which cannot be discharged than the longer list of those which can.
Debts Which Cannot Be Discharged
What are some of the debts you will still be liable for? If you owe money under family court proceedings, for example CSA payments, you will still be liable for those payments. If anyone has filed a personal injury claim against you and the court ruled against you, you’ll still owe those payments as well.
Any court fines which are outstanding will not be dissolved by the bankruptcy, and if you have debt from fraud or any other crime, you will still have to pay.
Student loan debts cannot be discharged under personal bankruptcy either, and if you incur new debts after your bankruptcy order, you will owe on those new debts, whatever they are.
If you have acquired assets after your discharge, the bankruptcy officials will not be able to seize those assets. Any seized assets from earlier in the bankruptcy proceedings will not be returned to you when the discharge goes through.
One of the challenges which come with dealing with a bankruptcy is of course that your credit rating will be damaged. While your discharge will not be recorded on your credit reference file unless you ask for it to be, your credit rating will remain low until you work it back up again. This can lead to financial difficulties in the future.
A bankruptcy is ultimately supposed to offer you some kind of clean slate so that you can erase your past debts and start building up credit and cash without the past hovering over you. Things don’t always go smoothly, however, and sometimes people who have had their debts discharged still need to borrow money.
Borrowing After Bankruptcy
One method of procuring short term loans is to get a payday loan. Payday loans in the UK provide flexibility for people who for one reason or another may not be able to get a traditional loan.
Most of the payday loans UK companies offer are for small sums of money (generally a few hundred pounds) and can only be taken out for a couple of weeks or a month. They do come with high interest rates, but this is the price which you can expect to pay for convenience.
Payday lenders may choose to loan money to you even if you have low credit or no credit—this is one of the benefits of getting a payday loan.
You can get the money fast, and you can take out a flexible, small amount to cover an unexpected expense. It usually takes just hours or days to get a payday loan application approved and funds distributed.
Examples of situations in which a payday loan could come in handy include a sudden medical need, the need to replace a car part, or the need to pay rent when income is late. Short-term loans aren’t designed to replace income—simply to help you cover gaps when there are poor timing and an urgent need.
When it’s time to pay back the loan with interest, your payment will be taken out of your account automatically. That’s why it’s so important that the money be there.
Payday loans do have their critics. These critics say that they create cycles of debt, but this can more accurately be ascribed to improper use of loans by customers.
Customers recovering from bankruptcy already know how dangerous a spiral of debt can be, and that’s why it’s important to only use payday loans as needed, and only when there is no other recourse (the payday lenders themselves advise this).
Using payday loans frequently or when the need isn’t urgent results in having to pay high interest and fees, which can accumulate into a pattern of debt. By using payday loans responsibly, however, customers in the UK can take care of their emergency needs and protect their financial resources.
Debt Impacting More Than Just Your Credit Rating
It has been reported that as many as 8 out of 10 people in debt, claim that the situation is having serious implications on their lives, in terms of the relationships with people around them, ability to concentrate at work and general wellbeing.
Many people see debt as a shameful position to be in and as such keep their problems to themselves. With no outlet for the worry and frustration associated with debt, people become vulnerable to mental and physical illnesses.
Debt is often at the forefront of many people’s minds, and the stress and anxiety will often find prohibit usual sleeping patterns.
Sleep deprivation can cause problems with both physical and mental health. It’s common for anxiety to cause irritability, shortness of breath, tightness of the chest and dizziness. If you manage to get on top of your financial problems, you can substantially reduce stress levels.
It’s not just the knowledge that you are in a bad financial situation, the constant calls and threat of legal action just worsen the situation.
According to the Consumer Credit Counselling Service (CCCS), 37% of their clients claimed that debt had caused adverse effects on relationships with partners, whilst 22% claimed that relationships with their children had been affected.
Debt can have serious consequences on a person’s wellbeing, which, in turn, can seriously affect your whole life. Ignoring the problem will simply make matters worse. Your everyday life can become miserable and your finances can soon overshadow everything else.
But it needn’t come to this. The first action is to admit that there is a problem. It is vital that you share your situation with others around you. Debt is an issue that affects a large proportion of the UK population and nobody in that situation should ever feel they should deal with it alone.
There are plenty of resources out there to help and give advice. There is a government-funded charity at www.stepchange.org, that has been set up to give free, impartial advice for those in need of financial help.
The help is there, so it’s up to you to use it! But be warned; there are some debt companies out there who don’t always have the best of intentions. If you’re not careful, they could actually land you in even more debt. Do your research and don’t fall foul to these rogue companies.
Read also: Debt Collection from NCO Financial Services