OR chasing landlord for back rent!! HELP NEEDED!!

gemc86_2

Hi,

I went bankrupt in May last year. I paid my landlord rent I owed them (£3000) in March and then then decided to go BR in May. The official receiver asked for the address of my landlord in July and also the amount I paid in back rent. This was sent and I have not hear anything from the solicitors until last month when my landlord received a letter asking for all the money back. If my landlord pays this back then I will then owe my landlord again!! Can anything be done to stop this from happening???????

Any advice much appreciated!

Many Thanks
Gem

Ineedaname

Unfortunately your landlord became a creditor when you accrued arrears on your rent. You made a payment that preferred one creditor over all others so the OR is within their rights to claim that money back.

The good news for you is that you won't owe your landlord again as the arrears fall into your BR.

The bad news is the landlord will be short of his rent arrears with no way of recovering them. He may see a little of the money if, once the OR has taken their fees, there is some left over to apportion to all creditors, but this will be minimal if any.

So you may face your landlord wanting you out of the property, it's up to you to negotiate with him on that score. But you would be acting illegally if you agreed at any time to repay the arrears.

JCS1

There's something about rent and the landlord having the right to distrain - back in a minute with the links.

JCS1

Chapters 30.77 - 30.80

http://insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter30/Part%204/Part%204.htm

And then follow the link in 30.77 to Chapter 9

I've also requested someone else on this forum to have a look at this. I assume that the OR's view is that you made a preference payment to the landlord, but if was for overdue rent..... then I've not heard of this situation before.

gemc86_2

Thank you for the quick replies!
The link was helpful and I will need to discuss this with my landlord!
I was in hospital for a few months (reason for needing to go bankrupt!!) The landlord let me pay the rent back (I had to sell my car to do this) and stay in my home. If it was not for the kindness of my landlord then I would have been homeless too!
I can not believe the OR left it 8 months before contacting the landlord (once the money had been spent on house improvements!!!)
Gem

Ineedaname

Brilliant JCS, many thanks for that as I was all doom and gloom with my limited knowledge.

Edit: Just read the link. Does that mean the OR cannot claim back the arrears from the landlord or just that the landlord cannot boot the OP out if the OR does get the money?

Gem - hope you get it sorted OK with help from that link.

JCS1

My knowledge of rent arrears isn't the greatest (but it did ring a vague bell), but I'd wait for a second opinion that I've asked for.

debtinfo

I would write back to the OR quoting these 2 paragraphs from their technical manual if they apply to your sitution. On the grounds that you did not desire to prefer them but were concerned about your tenancy if you did not. Did the Landlord make any mention of chucking you out or anything like that, if they did the second one applies.

31.4A.28 Desire to prefer
The key point so far as regards deciding whether a preference has taken place is to decide whether or not the debtor was influenced by a desire to put the creditor in a better position (desire to prefer) than they would otherwise have been as a consequence of an insolvency event URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part4A/Part%202/Part%202%20notes.htm#3"][COLOR=#0066cc]note 3[/COLOR][/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part4A/Part%202/Part%202%20notes.htm#4"][COLOR=#0066cc]note 4[/COLOR][/URL.
The debtor must have been influenced by a desire to prefer, but this need not have been the dominant intention. In other words, for a preference to be successfully challenged, the desire to prefer the creditor must have been part of the decision to enter into the transaction, but it need not have been the only factor nor, even, the factor that tipped the scales in favour of entering into the transaction.
Desire can be inferred from the circumstances of the case. It has been held by the court that there was no desire to prefer when the company granted its bank a debenture over its assets and therefore there was no preference. URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part4A/Part%202/Part%202%20notes.htm#5"][COLOR=#0066cc]note 5[/COLOR][/URL.
Just because the creditor gains an advantage does not, of itself, mean that the debtor had a desire to prefer that creditor. It would still be incumbent upon the office-holder to prove that the desire to prefer was actually a motivating factor URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part4A/Part%202/Part%202%20notes.htm#6"][COLOR=#0066cc]note 6[/COLOR][/URL.

31.4A.46 Creditor pressure
The most likely circumstance in which it may be viewed that a payment to a creditor is not a preference is where that payment was made as a result of pressure applied by the creditor. The pressure may be threats to bring legal or recovery action, or threats to cease to supply the debtor – but, importantly, the threat(s) must be genuine.

debtinfo

gemc86 wrote: »

Thank you for the quick replies!
The link was helpful and I will need to discuss this with my landlord!
I was in hospital for a few months (reason for needing to go bankrupt!!) The landlord let me pay the rent back (I had to sell my car to do this) and stay in my home. If it was not for the kindness of my landlord then I would have been homeless too!
I can not believe the OR left it 8 months before contacting the landlord (once the money had been spent on house improvements!!!)
Gem

You could also claim that the car may(depending on your circumstances) have been exemted anyway so there was no loss to creditors.

If all else fails and lanlord obtains suspended possesion order, you could point out to the OR that the debt would still be allowed to be paid anyway

debtinfo

as per here
31.7.82 Rent arrears
In the case of Harlow District Council v Hall [2006] 1 W.L.R. 2116 URL="http://insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part7/part4/part_4notes.htm#1"][COLOR=#0066cc]note 1[/COLOR][/URL the Court of Appeal held that the right of a landlord to recover his/her property from a defaulting tenant, irrespective of whether the landlord does or does not require a court order to do so, is not affected by bankruptcy.
The case concerned the situation where a possession order had been obtained against a tenant in respect of rent arrears by the relevant District Council. The possession order was then suspended when the tenant agreed to pay current rent plus an amount to discharge the arrears. Subsequently the tenant was declared bankrupt and the Court of Appeal did not dispute that rent arrears outstanding at the date of bankruptcy became a provable debt in the bankruptcy proceedings. However, the Court of Appeal determined that the possession order was not a remedy against the property or person of the bankrupt and therefore was not restricted by the provisions of the Insolvency Act section 285 (3) (with reference to earlier cases of Ezekial v Orakpo [1977] QB 260 URL="http://insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part7/part4/part_4notes.htm#2"][COLOR=#0066cc]note 2[/COLOR][/URL and Razzaq v Pala [1997] BPIR 726 URL="http://insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part7/part4/part_4notes.htm#3"][COLOR=#0066cc]note 3[/COLOR][/URL) The Court of Appeal made it clear that the local authority might have sought possession of the property both before and after the date of the bankruptcy order.
The consequence of this is, where a possession order is made in respect of rent arrears, the court may suspend that order on the condition that the rent arrears will be discharged over a period of time. Where the individual concerned is an undischarged bankrupt then it is anticipated that any amount ordered by the court to discharge the rent arrears would be taken in to consideration when assessing the individual's ability to make payments under an income payments agreement/order.

Ineedaname

Debtinfo - you are a star as always. :A Thank you.