Sold car 8 months ago now creditor wants me bankrupt

David20

Hi I have been very stupid with money over the last 5 years resulting in owing around 90.000 pounds on credit cards and unsecured loans I stopped paying these a while back
Now I have had a letter from one of my creditors wanting to file for bankruptcy .I have no assets
I did have a car 8 months ago that I sold to my brother in law and I was payed cash for it (£12500) that was the market vaule
The car was transferred to his name the day he brought it
He still has it.
Would this be a promlem as it was a asset of mine and I sold it for cash so there is no bank Transfers for the selling of the car.
I don’t have this cash anymore and it did not put into my bank when I received it
I never knew at the time that bankruptcy would be happing in the future. I have not asked to be bankrupt one of my creditors did. Thankyou

Minkym00

The first question that will be asked is what happened to the £12.5k and why you didn’t put it towards paying off your creditors. What did you do with the money and do you have any evidence of it?

Secondly, the OR will seek to reverse the transaction. They will instruct agents to recover the money back from your brother-in-law to distribute to your creditors.

Thirdly unless you have a reasonable reason for spending the money then you are looking potentially at a bankruptcy restrictions order for putting an asset out of the reach of creditors.

Browntoa

Did you own the car outright or was it also on finance still ?

David20

Thankyou for reply

The car was owned outright

I just spent the money over that 8 months on shopping,holidays ,going out etc suppose it’s classed as reckless spending and I really don’t know why I did not pay towards my debt I suppose I just buried my head in the sand.

I do not have any evidence of the funds either

I never hid this asset from bankruptcy as I never knew I was going end up being bankruptcy from one of my creditors
So if they reverse the transaction My brother in law has Gotto pay the 12.5k back or give them the car ?
Don’t see that being fair on him as he never knew I was in all this debt
I better tell him what’s going on
What if he was to sell the car ?
What would happen if I had sold the car to a member of pubic that was not family or friend for cash would they have reverse the transaction still then or is it just because I sold it to family ? Thankyou

Davy_Jones_II

So you took the money home in actual cash, and then took that out for your normal spending money?

You should be able to show then a large drop in the spending on cards at that point, show that you cancelled your car insurance, and show that your brother insured it himself, in his name, and without you as a named driver.

If, at this point you start saying that all the spending was in addition to your normal spending, and that either you continued to insure it yourself, or were added as a names driver then no-one is going to believe your story, as it’ll be clear that you never really sold it and that you just conspired to defraud.

Minkym00

Although you don’t know you were going bankrupt I’m afraid it doesn’t matter. The law says you should have sold your asset and distributed the funds amongst your creditors, this is where the misconduct lies.

If you had sold it to a member of the public then they would have bought it in good faith and the OR would get nowhere with challenging it. But as they are a family member then they’re potentially a ‘connected party’. The definition of a connected party is specific, and I would need to double check it, but it only matters in the length of time ago that a transaction took place. If it’s a connected party then the OR can go after it up to 5 years, a non-connected party is 2 years. Either way, you’d better let him know.

fatbelly

You have to be honest about what you did with the proceeds of the sale (and Davy Jones points you in the direction of evidencing what you spent it on).

You should also try to get a valuation of the car you sold to show that £12500 was the market value and therefore this was not a transaction at undervalue. If your brother-in-law gets a letter from the official receiver he needs to answer honestly and get his own advice if he gets a demand for money.

You will be fortunate if the creditor petitions for your bankruptcy as it will save you £680. Frankly I think it is unlikely to happen as they will have to pay more than £680 and will get nothing back.

Clouds88

Can’t your brother show his bank statement of withdrawing such a large Amount of money around the same time that you cancelled your car insurance? But somehow I’m not sure I believe the story, if it’s true the above may help.

I often wonder how an earth people get in so much debt like why do creditors keep lending when you are in say 50 K debt and don’t own a home?! I am not trying to be all high and mighty here as I went bankrupt over a year ago and it was the best thing I ever did. But that was for 20 K, I tried to consolidate a few times on an average salary not missing any payments and always refused so it just makes me wonder how people can borrow so much!

maxmycardagain

fatbelly wrote: »

You have to be honest about what you did with the proceeds of the sale (and Davy Jones points you in the direction of evidencing what you spent it on).

You should also try to get a valuation of the car you sold to show that £12500 was the market value and therefore this was not a transaction at undervalue. If your brother-in-law gets a letter from the official receiver he needs to answer honestly and get his own advice if he gets a demand for money.

You will be fortunate if the creditor petitions for your bankruptcy as it will save you £680. Frankly I think it is unlikely to happen as they will have to pay more than £680 and will get nothing back.

far more likely to down the route of a CCJ first (then a HC writ) to chase/seize assets

maxmycardagain

Browntoa wrote: »

Did you own the car outright or was it also on finance still ?

Selling it whilst on finance then not clearing the debt would be a criminal matter

FtbDreaming

Probably get done for money laubdering too. who has £12500 CASH in pound notes nowdays except for criminals?