Still dithering - then a small windfall

elljay

Like others I'm still dithering while hoping for that magical lottery win to kiss it all better (can't afford the ticket but still!) but I will be coming into a small windfall. It won't pay everything off but will allow me to pay something off most things so the wolves will stay away for a bit. Unless my business starts to pick up, the bills will still grow again and I'm pretty sure that within a couple of months I will be staring at the bankruptcy forms again, pen in hand.

How would the OR view this money if I do go bankrupt? Is there a right or wrong way to apportion it out to people? I have no intention on using it for fun or luxuries, just to pay as many bills as I can. It won't last long but I'm worried the OR might view it that I've repaid preferentially or something. If business picks up (Jan/Feb are always dire though) then I might not have to go br so I'm not intentionally doing anything wrong.

Advice please.

LJ

National_Debtline

Hi elljay

Have you thought about using this windfall to negotiate full and final settlement offers to your creditors, as opposed to simply paying off some of the balance only to then go bankrupt anyway?

Useful reading:

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Regards

Dennis @NDL

Action_Jackson

If you are not able to pay your debts as and when they become due, then technically your are insolvent, so best to tread carefully.

You must not favour one creditor over another. So, either pay them all nothing, or pay them equally.

If you don't intend to pay them anything, then you will need to show that the windfall was used purely for essential living expenses (rent, utility bills, council tax etc). It's fair enough to treat those as a priority and you won't be penalised for that - you have to keep a roof over your head and eat.

National_Debtline

Action_Jackson wrote: »

You must not favour one creditor over another. So, either pay them all nothing, or pay them equally.

At the risk of sounding pedantic, "pay them equally" should read "pay an equal proportion of each debt". It wouldn't necessarily prevent OP from going bankrupt if this principle were ignored, but as AJ suggests, the OR might take a dim view if they thought there had been a deliberate preference of certain creditors over others. I would stress the word "deliberate", however.

I should add as well that in bankruptcy, the OR would look at the events preceding it; if the OR deems a trader to have carried on business in the lead-up to bankruptcy knowing full well that they would default on obligations to suppliers/customers etc., this may lead to sanctions i.e. Bankruptcy Restrictions Orders/Undertakings.

This isn't intended to sound like a judgment of OP's intentions, far from it, but it's important that they be aware of this before "taking the plunge".

Regards

Dennis @NDL