Why is it wrong to sign a "Deed of Acknowledgement"?

Lensman_2

I have an interest in this so I have been keeping an eye on it. I have refused to sign this form.

While some simply say that it is wrong because it makes you responsible for the shortfall, this isn't the whole answer. You are responsible for these debts anyway, deed or no deed. And if the debt is formed pre bankruptcy it is a provable debt and goes in to your bankruptcy.

I think the real problem arises if you sign one after your BR date. According to the insolvency website, this creates a post BR agreement. This implies to me that the shortfall will not be covered by your BR, only the unsecured portion of the debt (i.e. their legal costs, repair costs etc) will be. The secured debt lives through the BR as it is treated as a new debt.

From http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter40/part2/part_2.htm

40.34B Treatment of shortfall – deed of acknowledgement (May 2008)
Alternatively, the bankrupt may sign a deed of acknowledgement (see Chapter 33, paragraph 33.127), which acknowledges his/her responsibility for the secured debt or guarantees payment. In doing so, after the bankruptcy order date, the bankrupt has entered into an agreement to post bankruptcy liability for any shortfall, which if such shortfall arises following sale, also remains valid as a debt provable in bankruptcy.

33.154 Deeds of acknowledgement of debt – Solely owned property
A secured creditor may request a bankrupt to complete a deed of acknowledgement of debt when the sale of the property results in a shortfall. A secured creditor may request this transaction so that no dispute will arise as to the amount of the shortfall or so that proposals to repay the unsecured portion of the debt by instalments can be settled. However, the secured creditor is entitled to claim in the bankruptcy for the unsecured balance of its debt and it will be up to the trustee to deal with such a claim. If the bankrupt completes such a deed, a new debt might be created on which recovery action might be based at any time within the limitation limit. It is not for the official receiver to influence the bankrupt about how to proceed in this matter. The official receiver should consent to the completion of a deed of acknowledgement of debt and if he/she becomes aware that the bankrupt has been requested to provide such a deed, the official receiver should suggest that the bankrupt seeks his/her own legal advice.

If I am right, it is still provable for a subsequent BR.



Thanks to an earlier post from Fermi for the inspiration on this.



Does anyone know otherwise or any more?


TIA

fiveyearplan

I just wouldn't sign anything just in case. If needed I would have waited for repossession - and that is what I did with my car. I'm BR now (for another 3 weeks 1 day!) so definitely wouldn't sign anything.

Lensman_2

Just been reading up on this.

Although it is not really relevant if you are going BR, signing the "Devil deed" (LOL - thanks copier guy) almost certainly acknowledges the debt.

This could be significant as the last time the debt was acknowledged is usually the last time a payment was made. 10 months ago for me at the moment. (So, only 5 years 2 months to go for the interest/costs and 11 years 2 months for the capital...)

nervousmother

Lensman,
Basically by signing the deed after you have gone BR you have created another debt that you are responsible for. The only way to get out of that new debt would be to go BR again.

Lensman_2

nervousmother wrote: »

Lensman,
Basically by signing the deed after you have gone BR you have created another debt that you are responsible for. The only way to get out of that new debt would be to go BR again.

Thanks NM, you are right.

I should have made it clearer in my previous post. I am trying to work out why you wouldn't want to sign one before BR. Opinion seems to be divided between those who say it is harmless (pre BR) and those who don't and I am just trying to get to the bottom of it. I.e what the risks actually are.

nervousmother

No risks in signing one before BR.
The BR wipes out this debt.
But why would you sign one? I dont sign anything anymore.
There are not many debts that are carried on after BR,

Student debt, good otherwise we would have lots of BR students.
Secured debts.. understandable as why have the goods if you have wiped out the debt. (although ones item sold if leaves a shortfall it becomes unsecured and is included in BR)
Fines: Yup I will go with that one. You are fined for doing something wrong and if you could wipe out the debt with BR what lesson was learnt.
anyone know anymore?

veersix

Hi NM,

In the "BR and the Devil Deed" thread you posted the following:

nervousmother wrote: »

If you sign a deed to say you are liable before going BR then that debt goes into BR. The BR wipes out all unsecured debts.
If you sign it after BR then you could be liable *but* Of course a second BR would be an option if it was the case that you were liable.
I had this question answered by a OR months before we went BR. Basically whatever you do before BR is wiped out

Before you went BR, did you sign the deed? If so, did it get rolled up into your BR?

Thanks.

nervousmother

Nope I did not sign it, was not offered it as it was not a vol repo. Wouldnt have signed anything anyway... but it does not matter if you do sign before BR.

jellygirl_2

Is this only in the case of a volo repo?? And what happens if you dont sign it in such a case??

debt_doctor

Hi,

OK ill ask a question. What positive advantage could be gained by either voluntary surrender of property or signing a deed of acknowledgement ?

DD

peachyprice

debt_doctor wrote: »

Hi,

OK ill ask a question. What positive advantage could be gained by either voluntary surrender of property or signing a deed of acknowledgement ?

DD

8ugger all DD.

Is this only in the case of a volo repo?? And what happens if you dont sign it in such a case??

Yes, it's only if you do vol repo. The worst that would happen from not signing it is the legal repossession may take longer, making you liable for council tax if it goes beyond 6 months.