Would this count as a preferential payment?

Options
2»

Comments

  • thevdm
    thevdm Posts: 137 Forumite
    First Post First Anniversary
    Options
    I'm not sure to be honest. I know if the full and final offer comes from both parties as a joint letter then it would wipe it for both of them, but if the letter is only named with one person I'm not sure how it would work.
    I may be wrong sometimes, I learn a little every time I'm corrected.
  • Daniel1971
    Daniel1971 Posts: 29 Forumite
    Options
    Think about it, if the full and final offer is not made from both parties, it would only clear one person’s liability in the same way that bankruptcy/IVA would.

    The lender does not have to do anything because they have a credit agreement from both parties agreeing to pay the full amount.
  • fatbelly
    fatbelly Posts: 20,492 Forumite
    Name Dropper First Anniversary First Post Cashback Cashier
    Options
    thevdm wrote: »
    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?
    Hi

    Based on this post, and your other thread

    https://forums.moneysavingexpert.com/showthread.php?t=5909003

    I think it is more straightforward for you to go bankrupt and worry about the joint debt when the dust settles.

    You may be thinking that the DRO fee is more attractive at £90. Is there any other advantage that is making you prefer a DRO?

    Do you own a car?
  • silvercar
    silvercar Posts: 46,960 Ambassador
    Academoney Grad Name Dropper Photogenic First Anniversary
    Options
    Daniel1971 wrote: »
    Think about it, if the full and final offer is not made from both parties, it would only clear one person’s liability in the same way that bankruptcy/IVA would.

    The lender does not have to do anything because they have a credit agreement from both parties agreeing to pay the full amount.

    If the full & final payment came from a third party to clear loan number XXXXX, can the lender chase either party?
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • ToxtethO'Grady
    ToxtethO'Grady Posts: 342 Forumite
    First Anniversary Name Dropper First Post
    Options
    If the joint parties are not named on any letters then they can be chased, so if your gran paid your debt as an F&F and all mail was addressed to her then the lender can still chase the joint debtors as they have not made the arrangement.


    Best practice is to advise the 3rd party to get the joint parties to ring in/contact with both of them named on any letter or agreement - and check subsequent agreement letters in case it is only addressed to one - it should always be addressed to both and if 1 is left off the lender can then pursue the other.


    Dealt with a case where Mrs wrote in paid £10K for both of them but all letters were addressed to her so they chased Mr for the rest of the debt, legally the lender was in the right, morally it was very underhand. But this is where it's best to get someone to look offers over.
  • thevdm
    thevdm Posts: 137 Forumite
    First Post First Anniversary
    Options
    Thank you, that clarifies the letter naming well. I am thinking of submitting bankruptcy first and then letting her make the F&F offers after. Due to my income I wouldn't be subject to an IPA/IPO in bankruptcy, so as far as I am concerned the only difference between a DRO and bankruptcy (for me) is the cost of setting it up. For the case of paying an extra £600 on setup fees it will eliminate any chance of an offer being considered a preferential payment causing extended restrictions.

    This may also go in her favor if the creditor considers one party of the loan has gone bankrupt, or it may make no difference at all to them when considering an offer.
    I may be wrong sometimes, I learn a little every time I'm corrected.
  • ToxtethO'Grady
    ToxtethO'Grady Posts: 342 Forumite
    First Anniversary Name Dropper First Post
    Options
    That would have been my advice and it does go someway to helping creditors make a decision if they've had a liability removed due to BR. Always better to chase 2 people and the other person always has the option of BR so a F&F would be looked as a partial win.
  • maxmycardagain
    maxmycardagain Posts: 5,747 Forumite
    Name Dropper First Anniversary Combo Breaker First Post
    Options
    thevdm wrote: »

    This may also go in her favor if the creditor considers one party of the loan has gone bankrupt, or it may make no difference at all to them when considering an offer.

    Any creditor looking at a joint debt but only 1 going BR will switch their demands to the non-BR for all the debt

    obviously they may still be open to an offer below the settle figure to pay it off
    Now we all know how it felt to play in the band on the Titanic...
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards