Family Debt

KimLyn

Hi,

Is it possible to include a debt to a family member in BR?

alastairq

hello.............all unsecured debt from whatever source are include in a BR, regardless.

The BR individual has no choice in the matter......even if they wished to continue servicing a family debt...if the OR discovered this, they might take action to recover all monies paid thus far.


With BR, it will be up to creditors to prove the debt to the OR, in order for them to have a 'share' of the BR pot..[if indeed, there is anything to share]...

KimLyn

Thank you.

It was just when we mentioned to the family member that we could no longer afford to pay our debts and that we were looking into going BR they said that we couldn't include the money we owed them as we didn't have an official agreement. We only have a signed sheet with the loan details on.

alastairq

hi.....tell them that any debt [unsecured on any asset, that is]...is included within a Bankruptcy... regardless of whether the Receiver knows about it...or not!

This is the beauty of Bankruptcy, it covers everything, regardless.

For the debtor to continue paying a creditor, regardless of who or where that creditor stands, is entirely contrary to the terms of the Bankruptcy.....you have the backing of the Court in this manner.

I suspect it could even be a Contempt of Court, if one creditor was shown favour over all the others.


If the family member concerned persists with their line of reasoning......once the petition for Bankruptcy has been ordered, inform the Receiver of the debt owed, and to whom.....!

Then, if subsequently the family member tries to pursue you personally, refer them to the OR....or allow them to attempt to take legal action against you [which will fail, absolutely...and involve costs to them!]!

In any event, the outcome may well be a family dispute...but hey, it's your life not theirs......and in all honesty, you can probably do without them?

Let's face it..if they cannot accede to family ties, and write off the debt for you, then really, are they a part of the family you really want to know?


As an aside, if you petition BR, then there will be little or no room within your SOA to allow any form of debt re-payment to continue, regardless of your [or your family's] views on the matter.

It certainly will not be allowed for by the OR.

KimLyn

Thanks again.

As our SOA shows there won't be any spare income to give to them but in their view we should get a second job to cover their repayment.

If they stop speaking to us it won't be a great loss. They are charging us 20% interest on the money they lent us. Think they saw our situation as a way to make money.

After nearly 6 years of trying to repay our £90k of debt and only managing to repay £4k, I think it is time to admit defeat!

NeverAgain_2

Family member in for a shock, I think, unless they are trying to wind you up.

Going bankrupt is one of the most powerful legal things you can do as a private citizen.

As alistair says, the debt to the family member is included in the bankruptcy, no one - you or the creditor - can change that.

Favouring one creditor over another is illegal, so no 'side deals'.

Inevitably, the family member will be annoyed and upset, but there is nothing they can do.

Happily for you, upsetting them doesn't cause you a big problem in the grand scheme of things.