Chapter 20 - Bankruptcy Flashcards
Informal options for a person facing financial difficulties (4)
- Informal Arrangement
- Re-mortgage
- Consolidate Loans
- Debt management plans
Formal options for a person facing financial difficulties
- IVA
- Bankruptcy
- Debt Relief order
- Temporary Debt Respite order
What are the three routes into bankruptcy?
- Debtor application
- Creditor application
- Supervisor of a defaulted IVA
If a debtor has already had a Debt Relief Order, in what time period would they be eligible to apply for a another DRO?
Will not be eligible to apply for a DRO again for a period of 6 years
Debt Relief Order eligibility criteria
- be unable to repay debts
- have unsecured debts of under £30,000,
- have assets less than £2,000
- have surplus income of less than £75 per month
- lived or worked in England or Wales in last 3 years
- No pending bankruptcy petition or DRO in last 6 years
- not be involved in any other formal insolvency proceedings at the time of application of DRO.
From April 24 these limits changed
How long does a Debt Relief Order last?
12 months
Will the debtor be protected from enforcement action by the creditors included in the Debt Relief Order?
Yes
Will a debtor be free from the debts at the end of the Debt Relief Order?
Yes
Can a debtor subject to a Debt Relief Order manage a limited company or act as a director?
No
What are the obligations of a debtor subject to a Debt Relief Order (4)
- Must comply with OR’s request for info
- Inform the OR of any assets obtained/increases in income
- Must not obtain credit of £500 or more without disclosing the DRO
- Not make payments direct to creditors included in the DRO
Temporary Debt Respite - how long does it last?
60 days
What is a county court administration order?
Debtor unable to satisfy a County Court Judgement
Have at least 2 creditors totalling no more than £5k
If made the administration order will provide for the payment of the total debt in instalments
What percentage of creditors have to agree to an IVA?
75%
How long does a bankruptcy last?
1 year
What is the threshold for someone petitioning for bankruptcy?
£5,000
When is a bankruptcy deemed to have commencted?
Date of bankruptcy order
(it is not backdated to petition as in liquidation)
What are the grounds for a creditors application for bankruptcy and what is the proof?
Grounds: inability to pay debts
Proof: Service of Statutory Demand and 21 days has lapsed or
Unsatisfied judgement execution
Bankruptcy - How long must there be between serving petition and the hearing?
14 days
Bankruptcy - if a creditor serves a statutory demand:
- how long does debtor have to pay
- how long does debt have to apply to set aside demand
21 days
An application to set aside a demand must be made within18 days after service of the demand. Debtor must show sufficient cause for setting aside:
- debt is disputed
- debt is secured
- debt has a counter claim at least equal to demand
What is a limit for a lower value bankruptcy?
On a creditors petition lower value is less than £50,000
On a debtors petition lower value is less than £100,000
If a debtor intends to oppose a petition for bankruptcy, within what time frame must he file his opposition in court?
5 business days before hearing
Is a petition for bankruptcy advertised?
No, the petition is not advertised unlike in compulsory winding up proceedings.
On what grounds can a debtor apply for bankruptcy?
Inability to pay debts
Proof = statement of affairs
Debtors application for bankruptcy - within what time frame must the adjudicator determine whether to make a bankruptcy order
Within 28 days from the date the bankruptcy order was made
Debtors applications for bankruptcy, what are the four conditions the adjudicator has to consider?
- Adjudicator has jurisdiction to make order (COMI of debtor is in England and Wales)
- Debtor is unable to pay their debts
- No pending bankruptcy petitions
- no bankruptcy order has been made in respect of any o the debts which are the subject of the application.
Debtor application for bankruptcy - if adjudicator requests more information more than 14 days from the date of the bankruptcy application then the determination period is extended by how long?
14 days
Once the OR has received a debtors application bankruptcy order, how long do they have to:
Gazette
Apply to Chief Land Registrar
Entry to be made to Individual Insolvency Register
As soon as reasonably practicable
If adjudicator rejects a debtors application for bankruptcy, within what time frame can the debtor ask for a review?
Within 14 days
this is not an opportunity to provide more into. and debtor must give reasons for requesting review.
If adjudicator confirms refusal of bankruptcy after debtor has asked for a review, in what time frame can the debtor appeal to court?
Within 28 days from the date of delivery of the notice confirming the refusal.
What are the three grounds for a Supervisor presenting a petition for bankruptcy?
- Failure to comply with obligations under IVA
- Giving false or misleading material information or making a material omission in any stmt at creditors meeting
- Failure to comply with supervisors reasonable requests.
What is the prescribed limit on a debtors application for bankruptcy?
There is no limit
The debtor has to prove his inability to pay debts by providing the personal information set out in Schedule 2A to the rules.
Can the trustee of bankruptcy challenge validity of transactions?
Yes if they appear to be preference or at undervalue
Within what timeframe must the Court send the Bankruptcy Order to the OR?
ASARP
In time period between making of bankruptcy order and appointment of trustee, who is responsible for bankrupts estate?
The official receiver
Is a bankruptcy petition advertised?
No
but may be with the permission of the court
How long does a county court Administration Order last?
No maximum time limit
Is it possible to serve a bankruptcy petition by post?
It is preferable to serve bankruptcy petitions personally but where it is difficult to effect personal service, it is possible to serve the petition by post
Who considers applications for debt relief orders?
The Official Receiver
True or false - the OR must investigate the affairs and conduct of every debtor?
False
OR does not have to if of opinion that such investigation is unnecessary
What is the aim of a bankruptcy restrictions order?
To protect the public from culpable bankrupts
Which of the following is not a bankruptcy offence?
A Failure to keep proper accounting records to 2 years pre petition
B non disclosure of property
C Concealing books, papers and other records
D Fraudulent disposal of property
A - this is grounds for bankruptcy restriction order
Who can apply for a public examination of a bankrupt?
The official receiver
Who can apply for a private examination of a bankrupt?
The official receiver and a trustee in bankruptcy
When is the bankruptcy of an individual deemed to commence?
The date of the making of the bankruptcy order
When would a bankruptcy petition be presented at high court?
- petition is presented by the crown
- debtor resided or carried on business within London insolvency distric for greater part of months preceeding petition and is not a lower value (50k creditor petition or 100k for debtor petition)
- residence or place of business of the debtor within England and Wales is unknown
