Loan from a friend

Southerner

Hi,

I ma trying to get my papers in order to filefor bankruptcy in a couple of weeks. But I am really worried about a repayment (£4000) I did two years ago. The thing is that a friend had been lending me money for a number of years, and two years ago, I took a loan and repaid her because she was having a hard time. Now I am concerned that the OR might see this a preferential treatment and request the money from her. Am I worrying too much? Should I declared this or hope that the OR doesn't look into it? PLEASE, can you tell me what you think? I am sooooo worried...:eek:

skylight

Were you insolvent at the time 2 years ago when you took out the loan? Have you been paying the loan back AOK??

It was 2 years ago and you can argue that BR was far from your course of action at the time, proveable as you were paying your debts then without too much of an issue etc. Besides if the OR were to ask her for it she would reply that the money had long gone and could not be repaid.

fermi

More or less than 2 years ago?

The OR can look at preferences made to family/friends for the period up to 2 years prior to the bankruptcy order.

debtinfo

or only 6 months for a non-associate

fermi

debtinfo wrote: »

or only 6 months for a non-associate

Friends and family are normally considered to be an "associate", so the period here could possibly be the 2 years.

debtinfo

s435 says hat an associate is a reative, or a husband/wife of a relative, or a relative of a husband or wife, it does not mention friends

fermi

debtinfo wrote: »

s435 says hat an associate is a reative, or a husband/wife of a relative, or a relative of a husband or wife, it does not mention friends

There has been some amendment of that if I remember correctly. Or further guidance issued. Not sure if it was in something like a subsequent piece of legislation, SI or Insolvency Rules.

I had to search it out for someone about a year ago, but damned if I can find it right now.

fermi

Nope. God knows where that was. Maybe a copy of a TN that I was emailed?

Closest I can come to it for now is this:

http://www.insolvency.gov.uk/forms/GuidanceNotesforProposal.doc

A preference has occurred when you have done something which has the effect of putting one of your creditors in a better position which in the event of you going bankrupt will be a better position than he would have been in if you had not done that thing. An example of this may be where you have paid a creditor in full but if you had not done that you would only have been able to pay a small percentage of that debt during the bankruptcy when all creditors are treated equally. That creditor is clearly better off. If the preference occurs during the period of 2 years before the presentation of your bankruptcy petition (if to an associate – e.g. a friend or relative) or during the period of 6 months before the presentation of your bankruptcy petition (if to someone who isn’t an associate).

debtinfo

The OR would only proceed if they could prove it in court. How would you define a friend, do you have to sign a friendship agreement, how long do you have to know someone to constitute a friend. If your boss pesonally loans you some money, or a work colleage or your landlord or you meet a total stranger in the street would that be a friend. What if you fall out with that person for being late paying them back are you still friends. On the otherhand a relative is clearly defined in law

money_penny_26

something else then to worry about.we consolidated in jan this year paid off c.c.an a friend who lent us 1200 last year.we had to pay her back cos she was struggling herself.no idea at the time we would be going b.r.in sept.we did not know we had done wrong here,just paying back a friend who was kind enough to loan us the money at the time.guess we must have been insolvent then,as who would borrow money if they were solvent.maybe we will get a b.r.u.or b.r.o. but you cant leave a friend in debt themselves by not paying them back..its all very confusing,getting into bother with o.r.for paying back a mate. regards penny

JPS29

at the risk of sounding controversial...

If you say you are not bothered about bro/u's and there is no auditable trace, ie direct payment from your account to your friends then you could simply state that you dont know what you done with the money, but assume it was for general day to day living etc.

This would keep your friend out of it.

BR is difficult when it comes to family/friends and money owed/repaid. There are moral issues which the IS dont take into account. I owed family money pre BR, an accountant who was more like a friend, and had also gifted money to relatives in the good times which would have raised an eyebrow or two. All the debts have been repaid hush hush personally by myself and the gifts I gave never mentioned to the OR.

Everyone's take is different on this, mine is technically wrong but IMHO morally right.