Reason for bankruptcy

scootw1

Any ORs with thoughts on the above?

missimaxo

Hi Scoot

What you are stating you are going to do above "I had to borrow off a friend to tide me over and have to pay them back so this is where some money is going" is called a preference payment and yes, is viewed very poorly by the OR.

Basically, your friend should be counted as a creditor the same as everyone else, and I am sorry, it is just hard luck on them. If you pay them back, you are "preferring" them to other creditors, the OR will do 2 things:

1 - Contact your friend and ask for the money back that you have paid (and if they refuse - they may ask the creditors if they will fund the appointment of an IP with a view to getting the money back, which could include a charge on your firends house)
2 - Consider you for a BRO/BRU because you committed the act.

The time limits are any such transactions in the 6 months before bankruptcy for an "unconnected" person, eg. friends/ banks etc. and 2 years before bankruptcy for a "connected" person, eg. family. A lot will also depend on how much you pay and exactly when. Paying your mum £500 2 years before your bankruptcy would probably be not worth prusuing for a BRO, but paying back your friend £5,000 2 months before your bankruptcy would definately warrant more investigation and consideration for a BRO.

I would hasten to add, if we just see a sum of money "disappearing" from your bank/ credit accounts, we would question where it went. Most examiners would also "test" any explanation you give, ie. if you said you gambled it, we write to casino's/ bookies, or if you say you gave it to a friend, we ask that friend.

I hope this helps you further.

scootw1

We're only talking £200. I only get 1361 a month so that doesn't give scope for huge amounts "disappearing" as you say

missimaxo

To be honest, it is not particularly material in the overall scheme of things. The guidance we have with regards preferences is not the amount, but the intent behind the transaction. It may be better not to mention it, just don't make it obvious like withdrawing £200 the day of your bankruptcy (other than to pay the fees).

If I became aware of even £200, I would still have to ask all the questions: name/ address of who to, when money was loaned by them, why did you pay it back etc. I would still write the letters asking them to confirm it, and when they did, write them a letter asking for it back.

I wouldn't however query a £200 withdrawal a couple of months before the bankruptcy UNLESS I suspected other things (eg. gambling) and in which case I would be querying all round sum withdrawals over a set amount (changes depending on the case and what I am investigating).

scootw1

I usually withdraw most of my money at the start of the month anyway and put it aside for what I need for the month. Find I can work better that way. Would the OR question that? As for the gambling, I have learnt my lesson from a couple of years back and don't do that now.

dowie_2

scootw1 wrote:

When you go bankrupt, does the OR ask where you have spent all your money leading up to the bankruptcy? I had to borrow off a friend to tide me over and have to pay them back so this is where some money is going. Can I tell the OR that or will they see it in a dim light?

I have asked this before and had good feedback but thought I'd ask again now that a coupe of people from the ORs office have turned up.

(I'm not committing fraud or anything, just wondering if you have to account for everything.)

Hi scootw1.

I went through this very same thing when I declared myself bankrupt, I had borrowed money from my parents and had payed them back just as you have done with your friend. I told the OR this and they wrote to my parents to inform them that if they could not prove that they had a financial interest in the car that i bought with the money then they would have to pay the money to the OR as it was classed as a preferencial payment. As it turned out the OR did not persue them.

You may do well to seek some more advice before you go through with this as there are so many thungs that can crop up. Its not as simple as turning up and getting your papers stamped in court.

Best of luck tho I no its not easy to go thru.;)

scootw1

Would this sort of thing apply for just a couple of hundred pounds though?

Happy New Year by the way