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Personal debt not included in bankruptcy
John-K_3
Posts: 681 Forumite
This is probably only of academic interest now, but I am curious about how things work.
A few years back my nephew borrowed £7k off me to cover barristers fees in relation to a criminal charge that he was facing. I was happy to lend the money, and thought he was likely to pay it back.
After a couple of token payments he just stopped paying and although I was pretty annoyed at seeing him on Facebook holidaying and buying cars, I just put it down to experience, and moved on.
Fast forward three years, and he declared bankruptcy, and I’m pretty sure that he did not declare my debt. Again, I am not planning on doing anything about it, but what legal sanctions or outcomes could he expect for this? He has wiped the slate clean, but I was put to the back of the queue, and got nothing from the deal. Given I did not complain at the time, is that the end of things?
Actually, it is not only academic interest, I am getting a bit sick of his dad claiming that despite his flaws at least he does not owe anyon a penny.
A few years back my nephew borrowed £7k off me to cover barristers fees in relation to a criminal charge that he was facing. I was happy to lend the money, and thought he was likely to pay it back.
After a couple of token payments he just stopped paying and although I was pretty annoyed at seeing him on Facebook holidaying and buying cars, I just put it down to experience, and moved on.
Fast forward three years, and he declared bankruptcy, and I’m pretty sure that he did not declare my debt. Again, I am not planning on doing anything about it, but what legal sanctions or outcomes could he expect for this? He has wiped the slate clean, but I was put to the back of the queue, and got nothing from the deal. Given I did not complain at the time, is that the end of things?
Actually, it is not only academic interest, I am getting a bit sick of his dad claiming that despite his flaws at least he does not owe anyon a penny.
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Comments
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You were a creditor in his bankruptcy whether listed or not. If he is discharged from bankruptcy that's the end of it.0
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It may well be an offence, but that doesn't give you an ability to claim the money.0
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If he deliberately failed to mention a creditor, and continued to make payments to that creditor it would indeed be an offence under bankruptcy and he could expect to have his discharge delayed for a year or two.0
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From my limited understanding of it people do sometimes fail to list all creditors, whether that be accidental or on purpose. It doesn't really matter as most debts, including the one you describe, incurred up to the point of bankruptcy become void.
You could attempt to take out a CCJ against him but all he would need to do is inform his OR and have you listed as a creditor and for him to put the bankruptcy information as a defence. The judge would not issue a CCJ in this case. If he didn't respond to the summons then a CCJ may well be issued but all he would need to do is pay a relatively small amount to have the judgement set aside thus voiding the original judgement.
If it could be proven that he favoured paying you above his other creditors or continued to pay you after being made bankrupt and during that year before discharge then the OR could in theory extend his bankruptcy for up to 15 years. However, for the amount he owes you it would likely be for a much shorter amount of time. It would make little difference to his chances of getting credit as the bankruptcy will be on his credit report for 6 years from the date he was made bankrupt anyway. You don't state that he has paid anything "extra" to you so this is largely extraneous information.
My advice is to chalk it up to a bad experience. As painful as it sounds your nephew no longer owes you any money and there is little to nothing than can be done to punish him for failure to do.0 -
Are you sure he declared himself bankrupt? Some people claim they have in order to get creditors off their back, without actually doing anything about it.I'm a Forum Ambassador on the housing, mortgages & 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.0
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AFAIK the London Gazette should be able to answer that one for you.0
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But as above, I’m not interested in “claiming” the money, I was asking if he’s allowed to leave a debt out. It turns out that no, he’s likely committing an offence.steampowered wrote: »It may well be an offence, but that doesn't give you an ability to claim the money.0 -
The Official Receiver would look at what he was seeking to gain by leaving the debt out. Was he intending to treat you preferentially? Was he trying to get under a threshold, like with a DRO? Was he trying to deny you a dividend from the estate?
Without any of those factors, when he was discharged that was the end of it.
I also wonder what evidence there was that there was ever a debt in the first place0
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