Creditors Petition and Legal Aid

stephen260472

Hi, I have been issued with a creditors petition to Bankrupt me, I have received advice from solicitors but have been unable to engage them due to the fee's and deposits required. Is there an option for me to get Legal Aid or am I fighting this myself?

Also I am in an IVA, and also dealing with other creditors on a daily basis, do I have to inform them that I have been served the petition?

Regards

Stephen

debt_doctor

Hi,

There is no provision in legal aid for defending a BR petition. Has your IVA failed, or is this a debt outside the IVA?
What do you have to lose in BR?

DD

alastairq

Also I am in an IVA, and also dealing with other creditors on a daily basis, do I have to inform them that I have been served the petition?

no...until the 'deed' is done, it is wind.

BR cannot be pre-arranged.

You could, if you wish, challenge the petition application.

Especially if you can show the Judge you are already re-paying the debt.

But you have to be there in person....in the Court.

However.....given what you have posted elsewhere, is BR a disadvantage to you?

[as DD has asked?]

stephen260472

Its a really really difficult one this, part of me wants to cave in after all the years of struggle, say screw it and screw everyone and live off the state as I cannot provide for myself or the other part is that after so much battling there is light at the end of a massive tunnel and if i can get to that its better for me and for everyone involved.

Basicly cut a huge story short.
self employed 8 years, retailer with staff and 2 shops, house of my own (mortgaged) and remortgaged to help the business 6 yrs ago, buy to let property (mortgaged) with sitting tenant generating income but this property has dropped in value by 20% almost wiping out equity. 1 of the shops has a flat above that I let out, new tenants have gone onto HB after telling me they would pay cash and HB have 2 month backlog. Had a third shop until last yr when I agreed to come out of the lease for a payment after finding another tenant, (was losing £600 a week on this shop) and its this payment thats the cause of the bankruptcy petition.

Drop in custom and takings means no income for me for 9 months from june last yr until now, backed into a corner due to arrears I have had to draw a wage but cannot now stock the shops and pay the rent in full. Business has huge secured loans with 3 yrs left to pay (secured against both houses) from shop fitting costs and franchise costs (its a long story) and I am 2 yrs into an iva which has just been reset because i have missed the last 4 payments.

So you look at that and say go bust...............

with the business secured loans, and the drop in equity on the buy to let and a reduction in equity on my own home if sold as eager buyers means no equity, in addition the iva is secured on top on both houses so there would definately be no payout to the landlord issuing the br petition. The BR would clear my debts and give me a fresh start but would void my shop leases and leave my staff redundant, unless the or says i can continue trading and then have to arrange new leases and new bank accounts and new card facilities which would be surely much worse. I can see light at the end of the tunnel because a huge amount of business debt has been repaid and when I reach the point of having repaid it all 2 to 3 yrs then i will be in a much stronger position.

If declared bankrupt then I am advised that there will be no payout to the landlord issuing the petition other than (possibly) costs.

The landlord served a statutory demand on me for the exit fee debt, plus legal fees and the estate agents fees for finding a new tenant, I offered them voluntary charges against both houses, and explained that I had no equity at the current time but if they accepted the voluntary charges then they would be in a position to recover the money in around 3 to 4 yrs. After considering this for 2 weeks and doing searches they rejected my offer on the grounds of no equity and accused me of engineering my rent down to there financial loss (i simply told the agents i couldnt pay and prooved it!). I then took further free legal advice and offered them a series of cheques payable 1 immediately and the remainder over 2 yrs to clear the debt. They have cashed the first two cheques (3rd one due next week) but have gone ahead with the petition (which makes no mention of my offer to secure or the payments offered and made) and the petition is for the wrong amount as I have paid instalments off.

I shall be contesting the petition.

debt_doctor

Hi,

Your best chance of avoiding BR is by convincing the LL that no money will come to him through BR. Even with £40k equity a petitioner would be very unlikely to get any return as that equity would be swallowed up in IP fees. Sadly some creditors do BR just to get the debt off their books or to punish.

Otherwise I doubt that you could avoid the petition being granted as;
You owe the debt.
You are insolvent (you're in an IVA)

DD

Rylynn

Oh dear this is really sad to read, as you also have staff. However you really need to consider now what is the best move for YOUR future.

BR is never an easy option as so many people seem to say it is, believe me I know having gone through it, it is stressful, but I can honestly say hand on heart I should never have gone into an IVA and should have gone BR straight away. I was not though in the position you are, I had no home to lose as I live in a council house, the only thing they could take was my car and the OR decided not to as it was my means to carry on working.

I went into the IVA as I did not want BR either, however with hindsight (what a wonderful thing) I now realise my creditors got hardly any of the money I paid to it for over 2.5 years!

The crunch came for me when I became very ill and had to take 11 months off work, when I returned I could only work part time and the IVA failed, it was the best thing that ever happened, I scrimped and saved all I could within 7 weeks to find the money for the BR.

Everyone is different, for me BR changed my life, no more nasty phone calls, no more people knocking on my door terrifying my then aged 13 year old son and my poor 72 year old mum.

That was 4.5 years ago, I have no debt, I have no credit, no cards, other than a hole in the wall card, I have a simple co op account that has never gone a penny overdrawn, we live within our means, but the relief of finally being able to get my life back on track was immense.

And you know what I have just been made redundant, and even that has not floored me, I had worked for them for 12 years, I have enough to cope on right now from my redundancy, and I know for a fact I will find another job, even if it is washing up in some Pizza bar like I did once before.

BR changed my complete outlook on life, someone the other day in a shop offered me one of their cards, I said is it a credit type and she said yes, I said no thank you very much... I do not want one. I will never ever live on credit again, get in debt or have the worry I had in 2007/2008.

People think it is easy to walk away from debt, for some it is as they seem to go bankrupt more than once, once was enough for me but I have never looked back or regretted it.

You have to decide for yourself what is best for you, and I am not sure I would have given the money that you did, as it could look like you have favoured one creditor as I assume you have more than one.

Take care and try to sit and sort it out in your mind, it may not be an easy route but people on this site will help you all the way through it, questions that seem dumb to you they never treat as dumb, when you are low they will try to not only pick you up but make you laugh. I know as without them here I think I would have gone insane.

As DD says you are insolvent and I believe it is illegal to carry on trading if that is the case, although the rules may have changed since I had my own business in 1990.

RL

stephen260472

Thanks for the replies guys. They are trying to punish me as in there own correspondance they admit that they are aware that there is no equity and therefore no realistic proposition of repayment on forced sales of assets. And yet they persist with the Bankruptcy Notice.

The correspondance from there solicitors states that "I engineered this, and engineered them into reducing my liabilities" Well I am not sure what planet they are on but I can prove the figures from that store and produce the staff as witnesses to affirm the fact that on most days only 3 or 4 people would enter the shop despite it being in Stoke on Trent City Centre and most days the shop would only take £20 to £30. In the 16 months I traded the store NEVER managed to cover any of its expenses even the Staff wage for the week.

I think that the Landlord doesn't believe that this can happen, I have to say that until it did to me..I didn't think it would happen either and the losses incurred have nearly destroyed my other 2 shops.

debt_doctor

Stephen,
Please re read Rylynn's post, it says it all really.
Like many of us on here, you have done everything you can to keep yourself afloat, trying to keep people employed.
Bankruptcy will protect you from the painful battle you have endured for so long. I had to end my business and had employees too.
Do yourself a favour and start to reflect on what BR will do for you and your family, the release of business pressures and what must be the effect upon your health.
Bankruptcy is a new begining, what you do with it is only limited by your own imagination.

DD

fiveyearplan

I also had to end my business and also had employees to deal with. It wasn't pleasant but I am still in contact with 2 out of the 3 and they are doing just fine. The 3rd one was an A level student still living at home with her mum and only worke 5 hours per week so although unpleasant, it certainy didn't ruin her world.

As said by others above, you need to do what is right for you and your family. You will get through it. Although my BR was petitioned by myself, it was because of the actions of a greedy landlord that I got put into that position. I felt just like you did, that will wear off and you will begin to see that it was a blessing and will give you the chance of a new start - I know it is really difficult to see that now.