Or wants money from family please help
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Which is why the financial situation of the bankrupt at the time they made the payment is crucial. If they were not insolvent at the time, then there is less justification in saying that the payment treated one person in preference to another.
There is little value in trying to extract money from someone who has none to spare. The idea of giving person 2 debt problems over a payment made a while ago is not beneficial to anyone.
Of course there is not.
However, someone facing insolvency could literally borrow to the hilt, give that cash to someone else a year or so before hitting the button and get away with it, if this mechanism didn't exist.
As you said, if the money was repaid in good faith, prior to considering insolvency, that's a defence that'll satisfy an OR. If the person knew that they had no way to deal with these debts, but paid someone in preference, that would trigger this.
In the OPs case, I don't think that they paid their dad in preference to the extent the OR thinks they did. That requires a level of intent I'm not seeing here. As you stated before, it needs defending properly.
In debt and looking for help? Look here for the MSE Debt Help Guide.
Also, If you need any free and impartial debt advice, the National Debtline, Stepchange, and the CAB can help.0 -
Because from an insolvency point of view, the money wasn't person 1's to pay like that.
If in debt like that, you pay pro rata (or contractual payments, of course), or not at all.
Doing the above is literally taking money away from others.
It sounds harsh to person 2, but it is person 1 that is being sanctioned. That money is legally recoverable, and yes, it'll be from the person who received it. You can't magic up another £5k from a person in BR, but that £5k in the OP example had to have gone somewhere.
If recovering that money also puts person 2 in a crisis, they must seek help of their own, but from a legal point of view the OR is acting correctly in the interests of all creditors in a BR.
Also to factor in here: If a person can just give all their cash to someone else before declaring bankruptcy and say they "owed" the money to the person, without a way to legally recover that sum it would be a system that would be abused in a heartbeat.
Harsh to person 2?! That's an understatement.0 -
Potbellypig wrote: »Harsh to person 2?! That's an understatement.
We hear of ex-spouses to bankrupts being saddled with problems that weren't of their making, so bankruptcy doesn't only effect the bankrupt or the people living with them.I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
You're not going to be able to 'find' money while you're in a bankruptcy.
Your Dad has had a demand for 5k - if he cannot pay it then he needs to take advice about his own situation - he could try National Debtline or CAB for starters.
The OR is following their internal guidelines - in their eyes you made a preferential payment to one creditor and they are seeking to get it back to distribute to all your creditors, after their fees.
As this happened 11 months before your bankruptcy there is an argument that you did not know you were insolvent, had no intention of going bankrupt and your decision to repay this money was not an intention to 'prefer' your dad.
However, 'Where the person who benefitted from the preference is a connected party or an associate, then it is presumed (unless the contrary can be shown) that the debtor was influenced by a desire to prefer '
So this really depends on your Dad's own situation now as to how far the OR is going to push it - he needs advice.
Afternoon fat belly I have sent u a pm hope you had a good weekend0 -
Darrenm325 wrote: »Afternoon fat belly I have sent u a pm hope you had a good weekend
I've responded.0
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