Sons Bankruptcy

Libbee49

Our Son is thinking of going bankrupt but he pays us £400 per month for a debt we took out in our name for him. He always makes sure he pays us this money before anything else because we could not afford to pay it ourselves.

If he goes bankrupt does this mean he will no longer able to pay us anything or can this be covered some way on the application?

This is really worrying for us.

Oldernotwiser

I think you'll get a better response on the Bankruptcy Board but my understanding is that ALL debts, whether personal or commerical have to be included. When the Official Receiver looks at his income to decide what payments he needs to make after bankruptcy he will be allowed to keep a certain amount for his own needs (after living expenses), but I doubt that would be anything like £400 per month.

Would this £400 be in addition to the money he pays you for rent/keep?

foxwales

Oldernotwiser is right.

All debts regardless of whether they are personal or otherwise are included in bankruptcy; therefore he would not legally be allowed to repay you after he has been declared bankrupt.

The only debts which are not included in bankruptcy are generally money owed to the state which are exempt under Bankrupcty.

Rafter

The debt is in your name. You are still responsible for paying it.

Your son will no longer be responsible for paying you but you will have a claim against his bankrupt estate. Unlikely you would see much.

If your son is still living at home, make sure you set up a rent agreement and arrangement for bills. These expenses are allowable if reasonable when he is declared bankruptcy.

If the loss of income might cause you a problem then make sure you speak to citizens advice or a debt charity like cccs or debtline about it.

If your son has been paying you but defaulting on other loans you may also have to refund some of the payments made in the six months running up to bankruptcy as he may have been treating you preferentially to his other creditors.

Good luck - make sure you all get free impartial advice.

R.