Chapter 23 & 24 - Bankrupts Estate Flashcards
Bankruptcy - what assets are excluded from the bankrupts estate?
- Tools/books/vehicles that are necessary for bankrupts employment
- Clothing/bedding/furniture for basic domestic needs
- Property held on trust for another person
- Rights under approved pension schemes
- Income for domestic needs
- Assets forfeited on making of the order
Items of excess value S309 - Trustee must serve notice within what time period when they become aware of property?
S309 trustee must serve notice within 42 days from the date on which the property in question first came to his knowledge
Items of excess value S309 - what is the effect of the Trustee serving notice?
- Property vests in trustee
- Trustee now has a duty to apply estate funds to purchase a reasonable replacement for property recovered under S309.
Income payments order - what would the trustee see as excessive expenditure when looking at an IPO?
- Private health insurance
- Gambling
- Alcohol
- Tobacco
- Subscriptions to TV services
- Excessive mortgage payments
- Charitable donations
- Voluntary payments to pension schemes
How much notice must a trustee give to a bankrupt for an Income Payment Order application?
Trustee must give 28 days notice to bankrupt, together with a copy of the application and a short statement for the grounds of the application.
If a bankrupt has received notice of an Income Payment Order, what are his two options?
- Consent in writing to the application to court and trustee at lease FIVE business days before the hearing or
- Attend the hearing and show reason why the order should be other than that applied for
If a trustee looks to apply for an Income Payment Order, how much should be left over for the bankrupt?
The order must leave the bankrupt with sufficient income for meeting the reasonable domestic needs of their family.
Bankruptcy - what is the maximum duration for an Income Payments Order?
3 years from date of agreement
Bankruptcy - what is an Income Payment Agreement?
A written agreement made between the bankrupt and his trustee by which the bankrupt voluntarily agrees to pay a specific sum to the estate for a specific time period.
Bankruptcy - after acquired property - in what time period must the debtor advise the trustee of after acquired property?
When must trustee give notice to bankrupt to claim this property
within 21 days of becoming aware of the asset
Trustee has 42 days to serve notice to claim property
Bankruptcy - can a creditor retain the benefit of an execution if that was not completed and sums paid before bankruptcy commenced?
No
Bankruptcy - execution - a court enforcement officer must hold funds over what value for how many days before handing over?
What happens if there is a bankruptcy order in this time period?
If sum of over £1000 obtained, CEO must hold for 14 days.
If during this time he is notified of a bankruptcy petition, he must hand over the balance to the trustee after deduction of costs.
Does Commercial Rent Arrears Recovery (CRAR) apply when a trustee has been appointed?
Yes
but there are 3 restrictions
What are the three restrictions to CRAR in a bankruptcy?
- CRAR 3 months before bankruptcy
Proceeds will be charged with payment of preferential creditors, landlord now ranks as preferential - CRAR post order in respect of pre order rent arrears
limited to 6 months rent accrued pre order - CRAR between petition and order
six month rule should be applied first
Then the 3 month rule should be applied
Bankruptcy - Transactions at undervalue - what is the relevant time?
S339
5 years pre-petition
Bankruptcy - Transactions at undervalue - is there a need to show insolvency?
Is it assumed?
S339
pre-petition
0-2 years - No
2-5 years - Yes
Insolvency presumed it to a associate
Bankruptcy - Preferences - what is the relevant time?
S340
6 months - non associate
2 years pre-petition - to associate
Bankruptcy - Preferences - what has to be shown?
S340
Always have to show insolvency
Have to show desire to prefer - it is assumed if it is to an associate
Bankruptcy - Extortionate credit transaction - what is the relevant time?
S343
3 years pre bankruptcy order
Bankruptcy - Extortionate credit transaction - do you have to show insolvency?
S343
No
Bankruptcy - Extortionate credit transaction - is anything presumed?
S343
Presumed to be extortionate, onus is on the loan company to show it is not
Bankruptcy - Transactions defrauding creditors - what is the relevant time?
S423
Anytime
Bankruptcy - Transactions defrauding creditors - do you have to show insolvency and is anything presumed?
S423
No and No
Bankruptcy - Post petition dispositions - what is the relevant time?
S284
Between petition and the vesting of the estate in the trustee
Bankruptcy - Post petition dispositions - do you have to show insolvency and is anything presumed?
S284
No and No
Bankruptcy - Excessive Pension Contributions - what is the relevant time?
Do you have to show insolvency?
Is anything presumed?
S342A to C
Anytime
No
No
Bankruptcy - if there is no deed of trust setting out the split of equity for a jointly owned home, what percentages are assumed?
50:50
If one party claims it is more than 50%, then the burden of proof is on them.
Bankruptcy - when would rights of occupation of home occur and for what time period?
12 month delay
- Non bankrupt spouse has right of occupation
- Bankrupt has right of occupation where he has a beneficial interest in the property and any person under 18 has home with bankruptcy
Within what time period must the trustee deal with the bankrupts interest in a dwelling house in order to prevent it re-vesting in the bankrupt?
Within 3 years of the date of bankruptcy order
The court will not grant a charging order it the value of the bankrupts equity is below the prescribed amount, what is this amount?
£1,000
Under what section of the Act may a trustee apply for a charging order on the debtors bankrupts home?
S313
Which if the following matters will the court not take into account when looking at an application for an order of possession and sale made by trustee?
A - Interests of the bankrupt creditors
B - Conduct of spouse as contributing to bankrupt
C - Bankrupts Interest
D - Needs of any children
E - All circumstances of the case
C Bankrupts interest S336
Can a trustee call a final meeting to obtain his release if he has been unable to realise an interest in a dwelling unless he has applied to court for a charge?
No
How can a trustee prevent automatic re-vesting of a property within the 3 year time period?
- Realise the interest in the property
- Apply for order for sale or possession
- Apply for a S313 charge
- Enter into an agreement with the bankrupt, whereby bankrupt gets property back in return for a promise to pay money into the estate in the future
A trustee is required to service notice to state that the dwelling house of the bankrupt is one that the 3 year rule applies.
What is the latest time a trustee can serve notice?
Notice cannot be served any later than 14 days prior to the expiration of the 3 year period.
What is the maximum value of a charge that can be imposed on the bankrupts home under S313 of the insolvency Act 1986?
The value of the bankrupts interest in the property at the date of the charging order plus statutory interest
A windfall may be clawed back for the estate by the trustee in bankruptcy providing it was acquired by the bankrupt within what time frame?
before the expiry of one year beginning with the bankruptcy order
In bankruptcy from what date is the bankrupts estate deem vested in the trustee?
Appointment of trustee
Does a trustee need to seek directions from court on matters of commercial judgement?
No
