trying to get bankruptcy annulled

baglady

When I saw the OR last week she said if all the creditors were paid and they notified her to confirm this then the bankruptcy would be annulled.


Because my home is my only asset it seems likely that it would sold to pay my creditors. My family are trying to get money together to pay my creditors so that my bankruptcy can be annulled.

The total amount owed including court costs is over £20,000, the amount that they can raise is about £10,000. This will pay the main creditor who made me bankrupt for just over £6,000.
If they are able to make an arrangement with the other creditors to pay off the balances over a period of time would this be acceptable to help get the bankruptcy annulled?

I was not sure what the second part of the sentence about getting a bankruptcy order annulled meant. "You can seek to get your bankruptcy cancelled under the following circumstances. All your bankruptcy debts and the fees and expenses of the bankruptcy proceedings have been either paid in full or secured (guaranteed) to the satisfaction of the court.

Also one of the debts includes my outstanding ground rent and buildings insurance. My mortgage company sent a letter saying that they can add the outstanding amount to my mortgage. I'm not sure if they are aware of my bankruptcy status. Would this arrangement be allowed or do my family have to pay this amount too?

I will be calling the insolvency section of stepchange today and hopefully speaking with Citizens Advice Bureau tomorrow.


Any advice is welcome.

DorisTrousers

I would suggest, respectfully, that CAB will be useless in this scenario. Not a criticism in any way, but even if they can help they are probably going to refer you elsewhere anyway. Happy to apologise if I am wrong on that.

The key for you here is the amount you can raise. If this is not enough to pay the debt in full, which seems unlikely, then you will need to find another alternative. You cannot pay the petitioning creditor off in full as this is preference, and the OR would simply reverse the transaction. However, you are almost on the right track there, as there is nothing to stop you proposing an IVA to annul the BR, thereby including all creditors.

From experience, and I have annulled many BR's by this method, you will need to satisfy the creditors (as a whole, although the petitioning creditor does seem to have a worryingly large % of the debt) that they are likely to get a better return this way than by letting the BR run its course.

If the BR runs its course, then the OR will usually appoint an outside I.P. to act as Trustee. This can involve significant cost, and is preferential. If the Trustee does not act on the property for 2 and a quarter years, which is the norm, then their return from the proceeds of sale is likely to be very much less than if it were sold now. This may work to your advantage, as a comparison tool at least.

Be aware that, if you choose the IVA method, that creditors are likely to insist on getting a return in a similar time that they would get a return in BR, i.e. 3 years or so, not 5 years as is the norm in an IVA. Therefore, if you can raise the £10,000 and are willing (and able) to put a similar amount in over a 3 year period, plus costs, creditors are actually very likely to accept, but they will definitely insert a clause that you be bankrupted again if you renege on the agreement.

I appreciate that there is a heavy use of the word "likely" in this post, i.e. no guarantees, but that is the situation you face I'm afraid. Feel free to PM me if you are not sure on anything.

baglady

Oh sugar - I forgot about the preferential thing. My mum is on her way to the bank now to pay money into the account of the main creditor.

National_Debtline

baglady wrote: »

Also one of the debts includes my outstanding ground rent and buildings insurance. My mortgage company sent a letter saying that they can add the outstanding amount to my mortgage. I'm not sure if they are aware of my bankruptcy status. Would this arrangement be allowed or do my family have to pay this amount too?

Any advice is welcome.

Hi baglady


I suspect that the mortgage lender may have issued you this letter without the context of your bankruptcy. Any arrears of ground rent and buildings insurance would be unsecured debts and thus "provable" in your bankruptcy - by the same token, any attempts to annul the bankruptcy would require these debts to be settled in full alongside the others.


All things being normal, your mortgage lender will be aware of your bankruptcy by now. The fact that you have received this letter may just be down to their different departments not communicating very well with each other. I suggest you contact them to check that they are indeed in the loop.


Dennis
@natdebtline

National_Debtline

baglady wrote: »

Oh sugar - I forgot about the preferential thing. My mum is on her way to the bank now to pay money into the account of the main creditor.

Hi again


Have just seen this as you've posted since I started writing my previous reply. I wouldn't have thought that this creditor could or would accept this payment post-bankruptcy - you would normally need to liaise with the OR in order to arrange any such settling of accounts. And it's just worth reiterating, simply paying off the petitioning creditor won't suffice to seek an annulment.


Dennis
@natdebtline

baglady

National_Debtline wrote: »

Hi again


Have just seen this as you've posted since I started writing my previous reply. I wouldn't have thought that this creditor could or would accept this payment post-bankruptcy - you would normally need to liaise with the OR in order to arrange any such settling of accounts. And it's just worth reiterating, simply paying off the petitioning creditor won't suffice to seek an annulment.

Dennis
@natdebtline

Thanks, when I had my interview with the OR, she said if all the creditors were paid and contacted her to confirm this then bankruptcy would be annulled. The case isn't with a trustee yet.


I emailed the creditor for their details for payment explaining that my family were trying to pay my creditors. I will contact the OR.

baglady

National_Debtline wrote: »

Hi baglady


I suspect that the mortgage lender may have issued you this letter without the context of your bankruptcy. Any arrears of ground rent and buildings insurance would be unsecured debts and thus "provable" in your bankruptcy - by the same token, any attempts to annul the bankruptcy would require these debts to be settled in full alongside the others.


All things being normal, your mortgage lender will be aware of your bankruptcy by now. The fact that you have received this letter may just be down to their different departments not communicating very well with each other. I suggest you contact them to check that they are indeed in the loop.


Dennis
@natdebtline

Thanks I will contact the mortgage lender to find out if they are aware of the bankruptcy.