1st Credit Threatening Bankruptcy

Paul101082

Recently 1st Credit issued a statutory demand followed by a bankruptcy petition for a credit card debt 3 years ago for £4462. I'm worried and don't know what to do next.

I've done myself a budget sheet to see what id be in a position to be able to pay back but I'm struggling every month to make ends meet as it is so would only be in a position to offer £15 a month and I have read on other forums of such offers not being accepted.

I'm worried as I'm a homeowner and don't want to lose my house. I was lucky enough to get one of those 125% mortgages 8 years ago. The mortgage was for £65,000 and I had and unsecured loan on top for £19,500 to pay off other credit cards.
In those 8 years I have cleared off £8,000 off my mortgage but my flat is only valued at about £70,000 as it has a low lease on it.
Will they be able to make me bankrupt on this debt even though I am offering to pay what I can afford or are they just scarymongering me? Has anybody else that's a homeowner had these experiences with 1st credit?

Thanks in advance

fatbelly

The minimum limit for a SD goes to 5k on 1 October so they are getting in ahead of that change (which was requested by the courts to stop this kind of disproportionate use of SDs)

However, as of now, what they have done is legal and has the potential to go quite nasty.

I suggest you have a read of this factsheet and give National Debtline a call

https://www.nationaldebtline.org/EW/factsheets/Pages/36%20EW%20Statutory%20demands/Default.aspx

poppasmurf_bewdley

It will cost them a minimum of £705 to issue a bankruptcy petition through the courts, plus their own costs.

Do you think they will be willing to bear these costs to recover less than £5k?

Marktheshark

poppasmurf_bewdley wrote: »

It will cost them a minimum of £705 to issue a bankruptcy petition through the courts, plus their own costs.

Do you think they will be willing to bear these costs to recover less than £5k?

Yes they will, these people are experts and will have researched that the OP has property they can liquidate via bankruptcy.
Its only a good idea to go bankrupt if you dont have any assets to share out.

A CCA demand is first line of defence.
See if they have the CCA to enforce, if not they will have to back down.
The CCA demand needs to go in todays post with a certificate of postage.

Paul101082

I have already requested a CCA to which they eventually complied with (took about 2 months to receive once requested).

The thing is I have a unsecured loan on top of the mortgage of £19,000 which I have kept up the payments for. I ha e outstanding debts on 2 othe credit cards of £3k each. So if they were to make me bankrupt, all of these would have to be paid out of the bankruptcy also plus the Official receivers fees. So would it still be in 1st Credits interests to issue bankruptcy still and would they be aware of the other creditors also when issuing?

patman99

If you are not already doing so, make sure to start paying them £10 each month in respect of the debt. This makes their attempt to gain an SD look petty to the Judge and will make it less likely that one will be granted.

You haven't said how long you have until this reaches Court, so we have no idea of whether you have time to file a defence.

I am assuming that the process of applying to the Courts for an Sd allows the defendant the chance to file a defence. If it does, then do so.

If you do have the time to file a fence, then you will need to include an SoA as well as making a statement that you are paying the debt at £x per month and that this will clear the debt in x months.

Paul101082

Hi Patman, I was issued a statutory demand 3 months ago and then a letter stating Bankruptcy Action, it was at that point I read about requesting a CCA which I then did and they stopped the Statutory Demand. They have now complied with my request and telling me I have 14 days to respond. My guess is after this they will then start the statutory demand process again.

What is an SoA?

Another thing I forgot to mention is that as my flat only has 79 years left of lease, it is currently u mortgageable until I increase the lease. So if I were to be made bankrupt and the a force of sale was ordered, it wouldn't get market value and would be sold at auction for less therefore may not cover outstanding mortgage balance anyway, this is why I don't understand why they are proceeding with this. Surely they can see I have creditors elsewhere also

fatbelly

Paul101082 wrote: »

Another thing I forgot to mention is that as my flat only has 79 years left of lease, it is currently u mortgageable until I increase the lease. So if I were to be made bankrupt and the a force of sale was ordered, it wouldn't get market value and would be sold at auction for less therefore may not cover outstanding mortgage balance anyway, this is why I don't understand why they are proceeding with this. Surely they can see I have creditors elsewhere also

So you may be in negative equity.

You are correct that in bankruptcy the mortgage would be paid and then the OR has first call on the assets (equity). Their fees for dealing with property are around 30k. Anything then left over would be distributed across your creditors pro-rata. 1st credit would therefore get approximately 4/30 of what's left, and the remaining debt is wiped. They would get nothing.

Do they know this? Worth setting out the figures when you make your offer of £15 per month.

if this is a Northern Rock together mortgage are you in line for a refund?

Paul101082

No my mortgage is with another lender.

£30k fees? I still owe £57k on the property and have roughly £13k equity if it got full market value, which it won't as will need to have a cash buyer and I have 4 creditors so surely they wouldn't go for bankruptcy?

Are you saying that they won't get a penny?

patman99

Have you actually been paying them any money to clear the debt up until now ?.

If not, then start NOW. If you show that you have intentions of clearing the debt and can keep this roling until October, then they will be stuffed by the new rules.

An SoA is a Statement of Affairs. Basically, a list of all your income and expenditure.

If they stopped the S/D, do they have to go back to Court in order to get it applied again, or can they simpley re-apply it ?.

If they have to go back to Court, you can respond with a defence. This will buy you at least 28 days. As Court cases tend to take a while to get to Court, then this may well be enough to push the date back beyond October. If not, then you will be able to fight your corner and (hopefully) stop not only the SD, but the B/P as well.

Paul101082

Thanks Patman your help is most appreciated.

I was thinking of writing them a letter telling them the situation about the property value and it be worth less due to the low leasehold. I have documentation to prove all this so it wouldn't be on their best interests to pursue with bankruptcy