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Would this count as a preferential payment?

Hi all,
I am currently considering bankruptcy as the main option for my situation as my debts are too high for a DRO.

I have approx £25,000 in debt and my partner has approx £12,000 in debt. £11,000 of this is a joint debt between myself and my partner.

My partner has had an offer from a family member to make a full and final offer on her debts, which would include the £11,000 joint loan.

If this was to happen, the joint loan would be wiped out, leaving my debts at around £14,000 which would make me eligible for a DRO or bankruptcy.

My question is, if this payment was to come from my partner (to pay a debt with her name on it), would it be considered a preferential payment when I was to apply for a DRO?

Would I be better off applying for bankruptcy and then let my partner deal with making an offer afterwards or would I be better off waiting for her to make an offer and if it is accepted apply for a DRO?
I may be wrong sometimes, I learn a little every time I'm corrected.
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Comments

  • Hi, the full and final offer from your partner will only wipe out her clear her liability for the debt not yours - whatever payment she makes towards the joint loan will come off the balance but you will remain liable for whatever is remaining on that balance.
  • antrobus
    antrobus Posts: 17,386 Forumite
    thevdm wrote: »
    ...
    I have approx £25,000 in debt and my partner has approx £12,000 in debt. £11,000 of this is a joint debt between myself and my partner...

    You have £14,000 of debt. She has £1,000 of debt. You both have a joint debt of £22,000, it's not split 50:50.
    thevdm wrote: »
    ..
    My question is, if this payment was to come from my partner (to pay a debt with her name on it), would it be considered a preferential payment when I was to apply for a DRO?..

    I'd say, yes.
  • I don't think OP has split the debt 50/50? I think they mean their is a joint debt of 11k, so they understand that they would both be liable for the full balance of 11k as she later states the '£11,000 joint loan' rather than £22,000 joint loan.

    I wouldn't think it would be a preferential payment as the payment isn't coming from you? Your OH would have to continue paying the 11k loan even if you went bankrupt. It may be best to ring one of the debt charities and ask them this question. Your DRO application would have to wait until the payment is made and the account all close etc.
  • thevdm
    thevdm Posts: 137 Forumite
    100 Posts First Anniversary
    Hi, PrettyKittyKat is correct in the way I've split it.
    The joint loan is for £11,000 no matter who's liable, I'm aware that it doesn't split in half in any situation. Referring to it as a debt between myself and my partner was more to add who's names are on it.

    There's some mixed answers about whether it would be a preferential payment so I may be best to speak with one of the big debt charities for clarification. If the offer was from the other party of the debt and had nothing to do with myself then it would be strange to class it as a preferential payment, although what Daniel1971 says also makes sense regarding that an offer solely made from my partner would only write her name off the debt and reduce my liability by the amount of the offer.

    Thank you all for your help.
    I may be wrong sometimes, I learn a little every time I'm corrected.
  • any joint debts arent 50/50.....they are jointly owed, if 1 debtor fails the 2nd is liable to pay the whole amount
  • thevdm
    thevdm Posts: 137 Forumite
    100 Posts First Anniversary
    any joint debts arent 50/50.....they are jointly owed, if 1 debtor fails the 2nd is liable to pay the whole amount
    That is correct, the joint debt is for £11,000.
    I may be wrong sometimes, I learn a little every time I'm corrected.
  • Ref paying the £11k, the wife (if NOT going BR) can pay the the total, you cant stop her, she should ensure its clear WHO paid it, id pay by cheque keeping a copy (from her solo account), the IS cant complain if a 3rd party wants to pay your debts, or even get the person lending the money to pay direct...
  • thevdm
    thevdm Posts: 137 Forumite
    100 Posts First Anniversary
    Thank you, if this was to happen the payment would come directly from the person offering the money. In our situation it is probably best to avoid any money entering our account which isn't directly ours to keep.

    The main consideration is that any letters to the creditor offering a full and final payment do not have my name on them and only my partners name.
    I may be wrong sometimes, I learn a little every time I'm corrected.
  • thevdm wrote: »
    Thank you, if this was to happen the payment would come directly from the person offering the money. In our situation it is probably best to avoid any money entering our account which isn't directly ours to keep.

    The main consideration is that any letters to the creditor offering a full and final payment do not have my name on them and only my partners name.

    If the creditor will speak to a 3rd party (DPA and all that)
  • silvercar
    silvercar Posts: 49,936 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    Daniel1971 wrote: »
    Hi, the full and final offer from your partner will only wipe out her clear her liability for the debt not yours - whatever payment she makes towards the joint loan will come off the balance but you will remain liable for whatever is remaining on that balance.

    Is this true? If the offer is made as a full and final payment, I would have thought that the lender has to accept that it is final and a payment to wipe the debt. Particularly the case if it comes from a third party.
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