former joint business owner with spouse, left business in 2004 with mounting debts cards etc and moved abroad, returned in 2008 and contacted by HMRC. HMRC found an error by our accountant and demanded £19,000 from each of us, contacted Tax Aid who have ammended all Tax account details including error from accountants and resubmitted to HMRC, HMRC have now replied stating that the window for returns has ceased and therefore they will not take into account returns recieved after the original date.
They have already egaged bailiffs for bankruptcy proceedings.
If HMRC continue to make us bankrupt I have been led to believe that although other debts may be wiped out the HMRC continue to collect monies alledgedly owed to them, is this true or is the debt eliminated in the bankruptcy.
Answer: No, if made bankrupt any money owed HMRC will be included in your bankruptcy and discharged and you will no longer owe it.
Why then HMRC may continue to pursue making you bankrupt may depend on if you have assets that can be liquidated and/or just to use the tools at their disposal to try and collect a debt.
This article posted on our web site may explain this in more detail:
What Debts Can And Cannot Be Included In Bankruptcy?
Can I include council tax in bankruptcy?
Can I include parking tickets and fines in bankruptcy?
Can I include my student loans in bankruptcy?
What about CSA payments?
When someone makes the decision to file for bankruptcy, it is not an easy decision to make, and part of that decision making process is to know what debts can and cannot be included in bankruptcy.
The reasoning behind going bankrupt for many, is that they can no longer afford to service the debts they have; this can be through either just over-extending themselves, or some drastic change such as divorce, loss of work, change in income, etc.
So in going bankrupt one wants to be relieved of the debts, so they can move on in their life without trying to struggle and juggle who and what to pay, and just live a normal life.
And for many bankruptcy will allow them to do this by having all their debts included in the bankruptcy, discharging them, and giving them a fresh start.
But there are just a few debts that cannot be included in bankruptcy.
In looking at it, even if you have some debts that cannot be included in your bankruptcy, if the bulk of them can be included, this should allow you some financial room to try an set-up repayment arrangements for the debts that cannot be included.
Let’s begin with what can be included: all unsecured debts such as catalogs, credit cards, overdrafts, unsecured loans, previous utility providers bills (electric, gas), previous landlord rent arrears, taxes, etc.
Yes, even taxes owed to HMRC can be included in your bankruptcy. So if you are self-employed and are found to owe or have not paid taxes and cannot afford to pay the taxes, bankruptcy will relieve you of this debt.
One form of debt you cannot include in bankruptcy are secured debts such as a mortgage or charge on a property, however if the property is repossessed, and there is a shortfall, the shortfall now is unsecured, and can be included in bankruptcy.
Tricky but it works.
So as you can see the majority of anything you owe can be included in bankruptcy, so now, what cannot be included:
While you can include utility bills and rent arrears there is a caveat to this, you would not want to include your current utility provider(s) or current landlord. By doing this the utility company can stop service to you, and your landlord can have you moved.
If do have these types of bills and are in arrears, you are allowed to work out a repayment arrangement outside of your bankruptcy.
As for what you cannot include in bankruptcy:
Council taxes: you can include previous years council tax in your bankruptcy, but you cannot include the current year’s taxes.
So using September as an example as the month you were to go bankrupt, and you owed council taxes for the years 09, and 08; you could include all the previous years but not this current year, so you would need to pay or work out an arrangement for the taxes owed from April 2010 until September 2010, if you owed anything from this time period.
Parking tickets and municipal fines: sorry, but no, you cannot include all those parking tickets or any fines you may have received. Once again you will need to pay these or work out a repayment arrangement outside of your bankruptcy.
Student loans: student loans are the only types of loans that cannot be included in bankruptcy. These need to be paid or as with other debts that cannot be included in the bankruptcy, some form of arrangement will need to be put into place.
CSA arrears and payments: no, these are considered priority payments for the welfare of children and cannot be discharged in a bankruptcy. If you have a large amount of CSA arrears, you will need to try and work out a repayment plan on this outside of your bankruptcy.
For the majority of people going bankrupt these bills and debts that are excluded from bankruptcy do not have much impact on us or our bankruptcy.
For those that have one or more of these forms of debt, again, hopefully by being relieved of all your other debts, you can set-up an affordable repayment plan for these.