Owing money to friends and family.

PatrickMcCann

Hi

I'm only new to the site and think I have previously posted this incorrectly. All replies appreciated

I have taken advice and have been told that Bankruptcy is my best option

The only thing that is holding me back is the favouritism to creditors issue.

I have consistently borrowed money from friends and family to help me to get by. These are generally small loans (£50 or less) but one or two have been for hundreds to pay bills.

All of my loans to friends have been repaid but, I am afraid that the OR will consider this favouritism to creditors and try to demand the money from my friends and family!

My friends are telling me that I'm over thinking things and that the OR would not spend time looking through my statements (everything was done through bank transfers) to follow the pattern and work out how much I have repaid to each friend to try and get the money back from them. Plus they won't be able to confirm which payments are repayments or other simple transactions.

Can you clarify what happens in this situation please

Many thanks

Patrick

Rrushi_Shqiptar

I don't see this as an issue. its not your reason for going BR.

You wouldn't be able to favour them if you had been made bankrupt.

The OR wont make you pay it back.

JCS1

Technically, it is creating a preference, but given the values involved I can't see it being an issue.

michael1983l

I think people misunderstand preferencing a creditor, I certainly did and it stopped me from doing what I needed to do for 2 years.

Preferencing a creditor in terms of the bankruptcy as I understood it in the end, means making extra payments beyond your normal contractual payment with a view to improve that creditors position.

If somebody lent you £500, with a view to having that £500 back in one payment, you are not preferencing them by doing so.

Much like I made continued payments to my parents for 2 years, whilst not paying other creditors and this was not seen by the court or OR as preferencial treatment as I was paying the set loan payment amount that I had been doing throughout the loan period. If I had started to double or tripple the payments just before BR for example, then this WOULD be classed as preffering a creditor.

Rrushi_Shqiptar

Surely as the OP is not BR yet he is able to decide as to what debts he pays off and how.

This is all prior to BR, I don't see how it would be an issue with OR esp considering the amounts, as the advice is when in debt. Pay of the Loans such as council tax, mortgage and secured loans?

Just my thoughts

National_Debtline

Rrushi_Shqiptar wrote: »

This is all prior to BR, I don't see how it would be an issue with OR esp considering the amounts, as the advice is when in debt. Pay of the Loans such as council tax, mortgage and secured loans?

Under the preferential payment rules, the debtor would either need to be insolvent at the time of the transaction - or become insolvent as a result of it. Generally speaking, 'insolvency' would mean being unable to pay their debts as they fall due. For a preference to be proven, it would need to be shown that there was a desire to put one party in a better position than the others. On the face of it, if regular contractual/agreed payments have been made up to now, I don't read the situation as creating a preference - especially, as you say, given the amounts we're talking about. That said, in situations like this we would always suggest seeking qualified legal advice from an insolvency lawyer prior to making the final decision.

Best wishes,

David @ National Debtline.

PatrickMcCann

Thanks everyone.