Few Questions about paying family money back

Windsurf

Hiya,

Just a few questions if anyone can help:

Owed parents £4k paid them back last September before I lost my job. Will OR be unhappy about this? Did not have any intention of going bankrupt back then and paid other creditors normal payments after I payed them right up untill December and still paying min payments on cards now. Only decided to go bankrupt on advice from CCCS this Month as we are on benifits and debts just mounting up and getting nowhere. Got a date end april and bit worried my parents will lose the money. we have owed them this since they gifted us a deposit in 2003 and they want to retire now and needed the money back. (altough we are steadily borrowing the money back for various items for my daughter)

Also once I go bankrupt we will have £50 spare each month will OR take this? as we normally will use this for everday items that are hard to list in monthly expensies (unexpected car repairs for e.g.) Do they just see benifits as the minimum needed to live on?

we have a car worth £6k which I know we will loose, will we be elidgable for another car from the OR (under £2k) we have an 18 month old daughter and live 60 miles from our home town (temp accomadation) which we are waiting to be housed in after selling our home to pay off debts in December.

any comments are appreciated.:o

cheers

fermi

Windsurf wrote: »

Owed parents £4k paid them back last September before I lost my job. Will OR be unhappy about this? Did not have any intention of going bankrupt back then and paid other creditors normal payments after I payed them right up untill December and still paying min payments on cards now. Only decided to go bankrupt on advice from CCCS this Month as we are on benifits and debts just mounting up and getting nowhere. Got a date end april and bit worried my parents will lose the money. we have owed them this since they gifted us a deposit in 2003 and they want to retire now and needed the money back. (altough we are steadily borrowing the money back for various items for my daughter)

The OR isn't going to be unhappy as you did this when you were still employed and BR was not a prospect?

For payments to relatives that may be a "preference" the OR might decide to ask your parents to repay the money if they/you cannot prove that you were not deliberately trying to put them in a better position than your other creditors.

However:

a) They would at first just ask. You parents could just say "no, we can't afford it".

b) The solicitors for the OR do not usually take on cases where they are recovering less than £5K, so it's quite likely that they would not try to enforce repayment through the courts.

So, can't guarantee that it will be OK, but it is more likely than not. I can't recall any people here in similar situations facing actual legal action to enforce any repayment.

Windsurf

Thankyou so much for taking the time to reply, you have put my mind at rest a little.

fermi

Windsurf wrote: »

Also once I go bankrupt we will have £50 spare each month will OR take this? as we normally will use this for everday items that are hard to list in monthly expensies (unexpected car repairs for e.g.) Do they just see benifits as the minimum needed to live on?

If your only income is benefits, then legally the OR cannot claim any surplus income.

When/if you start earning while undischarged from bankruptcy, then the OR can can only start to claim a % of surplus income if that surplus is £100 per month or greater.

The info in these 2 links should hopefully explain.

• IPO / IPA (Income Payment Orders and Income Payment Agreements)
  
• FAQ - Income Payment Orders / Agreements ( IPO / IPA )
  

fermi

Windsurf wrote: »

we have a car worth £6k which I know we will loose, will we be elidgable for another car from the OR (under £2k) we have an 18 month old daughter and live 60 miles from our home town (temp accomadation) which we are waiting to be housed in after selling our home to pay off debts in December.

That is really hard to say, as it is a judgement call by your OR as to whether use of your own car is and essential or merely convenient given your circumstances.

If you have a look through the info in this link:

What will happen to my car?

you may be able to get an idea of how likely it is for your circs.

InnerPeace

Hi Windsurf, the question the preference will depend on whether you were insolvent at the time on a cash flow and a balance sheet basis.

So, if you could afford to pay your domestic outgoings and your minimum repayments from your wages, or you have an asset that could have cleared or significantly reduced your liabilities if you had used it to pay your creditors, you'll be ok.

It will be presumed that you intended to prefer because of the closeness to the bankruptcy order so you would have to prove that the repayment wasn't a preference.

The best route is to show that you were solvent at the time. It doesn't matter that you didn't know you were going to go bankrupt, it's the solvency test that counts.

debtinfo

hi IP, for a recovery it is insolvent on a cashflow or assets basis not cashflow and assets.

Therefore most people are insolvent by this measure most of the time as most people have more debts than assets

InnerPeace

Yes, I said "or". It's insolvent on both tests for it to be a preference or solvent on one or both.

debtinfo

Hi, it is insolvent on only one test only, so if you were making regular repayments to your creditors but owed more than your asetts a recovery would still be possible

InnerPeace

When it comes to a BRO, if someone is solvent on one test then it's not misconduct. I haven't seen anything that says that there only has to be insolvency on one basis for it to be recoverable but if you can tell me where that comes from Debtinfo, I would be genuinely interested, cheers.

debtinfo

hi you are right that they would only pursue a BRO if insovent on both counts as for misconduct to be proved there is a higher standard. Netherthless for a recovery only one is needed as shown in section 341 (3) (a) and (b) of the Insolvency Act 1986.

Many more recoveries take place than BRO's as the OR is not saying that the bankrupt intentionally tried to defraud the creditors just that the money in a relevent period has gone to one creditor over another and the situation is being rectified.

(3) For the purposes of subsection (2), an individual is

insolvent if-

(a) he is unable to pay his debts as they fall due, or

(b) the value of his assets is less than the amount of his

liabilities, taking into account his contingent and prospective

liabilities.