questions about Bankruptcy

Reb2016

Hi,
A friend of mine has some serious debt problems and is looking into bankruptcy. I want to support her through this so that she doesn't feel on her own, and have said that I would help her with her paperwork and be there as a sounding board.


As a starting point she is making a list of her debts, which has brought up a couple of questions.


The first is that she has borrowed money from her adult children, my understanding is that she does go bankrupt she wouldn't be able to pay them back as this would be giving a creditor preferential treatment. However once she is discharged would she then be able to start to pay her children back? as it is possible they would be prepared to wait.


The second question is that she had a car on finance that her husband took with him when they separated as she couldn't afford the repayments (I did point out that she would still be responsible if he were to stop paying but she decided this was the best course of action). He went bankrupt a couple of years ago, but still has the car, would I be right in thinking that as the finance was in her name the OR may not have known about the car, and even if they did they may have considered it to be hers? It is possible that one of his family may have continued the payments. She doesn't know if the finance is up to date or it may even have been fully paid of by the family member. I think she will need to know this, as if it is still being paid of she may need to include this in her bankruptcy? does it make a difference if someone else has been making the payments? does it help if her husbands name is on the registration document?


Thanks in advance for any help.


Reb

NotEvanAPot

Payment at any point would be preferential and therefore frowned upon here (read: no one is going to advise it). In the big grown up world we live in however, are the children going to report the parent to the OR? Rather unlikely, so just avoid telling anyone about it.

Someone is enjoying a vehicle that could be waiting to be discovered (although increasingly difficult to avoid ANPR nowadays). Declare vehicle on application and move on from worrying, it is not her asset and nothing to be concerned over.

london1973

I'm in a similar position re family having had a lot of financial support over the past few years-
this has all been gifted to me, and hopefully one day I can return the various favours when members of my family need help, if your friends children can agree to such an arrangement then I would suggest that...

standalone

She can only pay money back to family if discharged without an IPA or IPO in place.

Discharge will take place after one year, however if an IPA or IPO is in place this will run for three years during which time your friends income is not hers do do with as she pleases, if you see what I mean.

NotEvanAPot

standalone wrote: »

She can only pay money back to family if discharged without an IPA or IPO in place.

Discharge will take place after one year, however if an IPA or IPO is in place this will run for three years during which time your friends income is not hers do do with as she pleases, if you see what I mean.

Incorrect. By the letter of the law, the debts to family are included in the bankruptcy, and as such are written off with discharge. IPA/O is irrelevant.

Also, automatic discharge is not a certainty, so please be careful using words such as "will". Cooperation and disclosure are required for discharge to occur at all - indefinite suspension of discharge does happen.

standalone

The original poster is in no doubt that debts to family and friends are included in bankruptcy.

The question asked was would she be able to start paying money to her family after discharge.

As I stated, after discharge if she is not paying an IPA or IPO she is free to do with her money as she feels fit and this includes giving money to anyone who helped her out in the past, family or otherwise.
The fact that she is no longer legally liable for the debit is not the question.

Also indefinite suspension of discharge does happen, but only if the bankrupt is not cooperating with the OR and in such cases what else can you expect other than suspension of your discharge.

NotEvanAPot

Which parts of my post, first and fourth (in response to your error strewn entry), drove you to type the above?

You appear to have a lack of understanding of the legal responsibilities placed upon a BR (undischarged or former) individual. May I suggest some research before handing out further nuggets of wisdom.

I thought I was belligerent on occasions, but I do tend to avoid posting the same thing albeit in a different order.

Reb2016, refer to first my response of this morning.

standalone

How did anyone as clever as you end up bankrupt I wonder.

Answer that one please.

Reb2016

Thank you for all the replies, they are really helpful, I know my friends children, and am pretty sure they would wait to be repaid if it helped their Mum to get sorted and it does seem that as long as she cooperates with the OR she should be free to do this in the future, so many thanks that's really good to know.

As the car finance is in her name, would I be right in thinking that if her soon to ex continues to pay the finance this could be seen as preferential treatment? So would he need to stop paying and give up the car? They are not on the best of terms so this could get very tricky. I'm thinking that she should contact the finance company and find out exactly what has been happening with the payments, and as the agreement is in her name they should be able to give her this information.

NotEvanAPot

The former partner would not be able to continue to pay the finance agreement, the OR would notify them and they would seek to end the agreement and recover the asset.

Just ensure it is on the BR application and let the OR handle the rest. No awkward conversation with finance company, if the former partner kicks up a fuss, they need to be prepared to challenge any threats with reporting to local police service via 101.

Reb2016

Thank you that's really helpful, I will show this thread to my friend so that she can start to think about what she would like to do.