Spent on credit card before bankruptcy

Bella383

Hi everyone

I am sadly planning to voluntarily bankrupt myself soon. Spending too much as a student, years of passing the credit around and then a break-up and job loss has left me unable to keep up anymore.

Anyway.. at the beginning of Feb I paid to enroll in a high education course at a beauty college. I paid for this using my credit card and it was about a thousand.... I hadn't really thought about bankruptcy at the time but of course knew I didn't have the money that's why I used credit

I am now very worried that I am going to get into trouble. Worst case would be if the bankruptcy people contact the college to get the fees back. It would be very embarrassing for me and make it very hard to reskill and start afresh as I want to. I could get a relative to pay it and owe them back, but too late now it's on my bill.

Any advice I'd be so grateful xx

Jono987

Hey, my advice would be not to worry yourself overly about it. I had similar things on my statements, however i told the OR in my interview that i honestly did not forsee myself going bankrupt when i made the purchases.

The OR (or at least the one i dealt with) is not out to get you and was a lot more reasonable than i had envisioned. I worried myself about it until my interview but, as many on here will say, it was no where near as bad as i thought.

If you are honest with them from the start im sure they will be understanding!

National_Debtline

Hi Bella383 and welcome to MSE

Bella383 wrote: »

I am now very worried that I am going to get into trouble. Worst case would be if the bankruptcy people contact the college to get the fees back. It would be very embarrassing for me and make it very hard to reskill and start afresh as I want to. I could get a relative to pay it and owe them back, but too late now it's on my bill.

Any advice I'd be so grateful xx

This isn't how the bankruptcy would work, so try not to panic. The Official Receiver (OR) cannot reclaim the money back in this way. As far as the college is concerned the fees have been paid and if you go bankrupt the debt to the credit card company is written off.


Make sure you get full, free advice from one of the independent charities before going down this road so you are aware of all of the implications. Big transactions just before going bankrupt may be looked at more closely by the OR but normally some form of 'intent' not to repay would have to be established for this to have any further consequences from the OR.


I am sure other people will be able to share their experiences and help put you in the picture. Good luck,


Laura
@natdebtline

Bella383

Thank you both, that puts my mind at rest a bit. The thing is, I Googled this sort of thing and found an American website which said college fees could be claimed back by bankrupt parents! :O

I am indeed worrying a lot. I spoke to StepChange and the advisor suggested the OR could indeed request a refund of holidays and things so I assumed the same for courses or anything else which hadn't been used yet. I am not really sure.... I hope not because it was done in good faith and life can change very quickly.

LizzieGoblin

Hi Bella

I'm in a similar situation where I spent money on a holiday and flight (not hugely expensive but significant) a few weeks before receiving professional advice and realising I was insolvent.

I'm worried that step change suggested the OR could force refund your course?!

It does however pose an interesting legal scenario: if the OR could demand you get things you've booked in the future refunded, who gets the money?

The college/airline/hotel would firstly refuse. But what if they have a no quibbles refund policy? Could the OR take advantage?

Does the OR have power over them to reverse transactions like they do over people who have received preferential payments?

In the event a refund was forced, would the company be legally obliged to pass the money back to the lender (credit card company) or the OR? There must be Visa laws or something here.

In which case, would the lender be obliged to pass it to the OR to split amongst all creditors or would they just keep it as it's their money and the transaction is void?

Mind boggles! Hope none of this can happen!

National_Debtline

Hello again,


I would disregard what you have read about the American process as that is completely separate to the UK procedure.


With regard to the course, it is possible that the OR may approach this differently if the course hasn't yet begun (I apologise for any confusion - I was under the impression you had started the course). The OR is there to act in the best interest of the creditors, and if the transaction is cancellable then it is possible the OR could reverse the process. Essentially it is at their discretion.


Reversing transactions, according to the technical manual, appears to be the most common where the transaction has shown preference to one creditor over another, hidden an asset to try and keep it safe in bankruptcy, is of detriment to the creditors by not including that in the bankruptcy process etc. I think you may want to speak to the Insolvency Service about this for a more definitive answer - 0300 678 0015.


Laura
@natdebtline

Bella383

Ok thanks all I see. But if the OR wanted me to cancel the course, the college would probably only return the money to the card wouldn't they? It's a private college. I can't imagine they would send a cheque out to the official receivers!

LizzieGoblin

Interesting. Further complicated if someone's holiday was booked on a credit card using a third party currency exchange site?! I mean the hotel is refundable but they received the money some way down the line..

luvchocolate

If that were the case do not worry how the O.R would get funds back, they have tremendous power.
Please try not to over think this I know its hard but its a process you will follow ..be honest and open and just let it take its course.
I too tend to over think then at at the end think what a waste of time all that was!
It will all be worth it in the end x