loan to a friend.

tyuiop1616

Hi all. Can anyone out there help me with a problem? I loaned £10,000 to a friend to help keep his business afloat. he has now sold his house and paid me back with the money from the proceeds. I know he cleared all debts that were tied to the property so thats not a problem. He is now talking about going bankrupt. According to my dad, the administrator, courts, etc. can ask me to give the £10,000 back as I was an unsequered creditor and I should not have been paid.
Will they ask me for the money back?
Will I have to give it back?
What are the consequences for me if I refuse?
What are the consequences for my friend if I refuse?
Can any one help?

skylight

Your Dad is right and wrong.

If your mates OR thinks that he paid you back and treated you favourably over other creditors, then yes - they could ask for it to be paid back. This has nothing to do with being a secured debt or not. In this case you were paid back along with other debts so it does not look like he treated you favourably over any others.

If the worst should happen, and the OR asks for it back, you reply nicely and calmly that a debt was repaid, you accepted that repayment in good faith and besides you have now spent your money on whatever you like (house repairs/lump sum on mortgage pay-off etc) and you do not have anything left to give the OR, very sorry but you consider the matter closed. Thats it. They cannot force you to give anything back that you do not have. And if they did it to you, they should do it to everyone whom your friend paid back.

fermi

skylight wrote: »

In this case you were paid back along with other debts so it does not look like he treated you favourably over any others.

That may not be right.

Any secured debts would have been paid out of the proceeds of the property first, as they should.

If they have then paid this "unsecured" debt in preference to any others, then it would certainly could be a preference under the Insolvency Act and therefore recoverable by the OR/trustee.

Whether they can force you to comply or think it is worth going to court depends on your circumstances.

skylight

Thanks Fermi - I don't mind being put right by you!! (or anyone else really)

fermi

skylight wrote: »

Thanks Fermi - I don't mind being put right by you!! (or anyone else really)

Well, it depends on the exact circumstances here and what this friend have done with the other creditors and when.

How long ago was this loan paid back tyuiop1616?

How long until your friend goes BR?

The two links below show how the OR/trustee can look at it.

http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part4/part4/part_4.htm

http://www.insolvency.gov.uk/freedomofinformation/technical/casehelpmanual/A/AntecedentRecoveries.htm

Bit of a read, but if you can wade through that you should have a good idea of what might happen.