Chapter 26 - Proof of debts bankruptcy

Question 1

If a trustee rejects a proof of debt, how long does the creditor have to apply to court to vary the trustees decision?

Answer 1

21 days

Question 2

What is a provable debt in bankruptcy?

Answer 2

• A debt to which the bankrupt is subject to at the commencement of bankruptcy
• A debt to which bankruptcy may become subject to after the commencement of the bankruptcy by reasons of obligations before bankruptcy eg. HP agreements
• Interest on the above is provable

Question 3

In Bankruptcy, what debts are not provable?

Answer 3

• Any fine imposed for an offence
• Obligations in family or domestic proceedings
• Obligations under child support
• student loans
• foreign taxes

Question 4

What debts are provable in bankruptcy but will not be written off on discharge of bankruptcy?

Answer 4

• Matrimonial lump sum orders
• Damages for personal injury
• Fraud

Question 5

Where a bankruptcy debt bears interest, is in provable?

Answer 5

Yes - up to date of bankruptcy order

Question 6

What is the current statutory interest on debts?

Answer 6

8%

Question 7

Is interest in respect of any period after the commencement of the bankruptcy provable?

Answer 7

No

Question 8

Bankruptcy - interest is paid after all debts have been paid in full.
Does the interest payable rank equally even if the debts do not rank equally?

Answer 8

Yes

Question 9

Late Payment of Commercial Debts interest runs from when?

Answer 9

30 days after the supplier performs his obligation under contract

Question 10

Proving in bankruptcy, what interest rate is used to convert foreign debts?

Answer 10

Converted into sterling at the official rate as at close of business on the date of bankruptcy order

Question 11

Proving in bankruptcy - what happens with discounts?

Answer 11

All discounts available to bankrupt must be deducted, eg trade discounts but NOT early settlement discounts

Question 12

If a secured creditor voluntarily surrenders his security, can they prove in the bankruptcy?

Answer 12

Yes, they may prove for the full debt

Question 13

What is the formula for discounting a future debt?

Answer 13

X/1.05^n

X = amount of debt
n = amount of time from bankruptcy to date debt is due

Question 14

Should the primary creditor or the guarantor prove in the bankruptcy?

Answer 14

The primary creditor

Question 15

Are foreign taxes provable in bankruptcy?

Answer 15

No

EU tax is provable (except Denmark)

Question 16

Are gambling debts provable in bankruptcy?

Answer 16

No

Question 17

True or False - a claim for rent payment in advance which straddles the date of the bankruptcy order should be admitted in full

Answer 17

True

Question 18

In general - in what time period are debts statute barred?

Answer 18

6 years

Mortgages 12 years (as contract under seal)

Personal injury - 3 years from when damage becomes apparent (not from date of injury)

Question 19

Where do debts to spouses rank in bankruptcy?

Answer 19

After all other debts and interest has been paid

Question 20

NOID - how much time must creditors have to prove once NOID has been issued?

Answer 20

At least 21 days

Question 21

Within what time period must a dividend be declared after NOID has been issued?

Answer 21

Within 2 months from the last date of proving

Question 22

Within what time frame must the trustee deal with creditors proofs after issuing NOID.

Answer 22

The trustee must, within 14 days from the last date of proving, deal with every creditors proof.

Question 23

What must be included in notice of dividend?

Answer 23

• Amounts realised from sale of assets
• Payments made by trustee
• Provision made of unsettled claims and funds retained for particular purpose
• Total amount to be distributed and rate of dividend
• Whether, and if so when, any further dividend is expected to be declared.

Question 24

Is a claim for damages arising from an allegation of assault provable in bankruptcy?

Answer 24

Yes

Question 25

Is a claim by US revenue for unpaid taxes provable in bankuptcy?

Answer 25

No

Question 26

Is post commencement interest on a bankruptcy debt provable?

Answer 26

No

Question 27

Is a claim for future rent by landlord provable in bankruptcy?

Answer 27

Yes

Question 28

Is student loans provable in bankruptcy?

Answer 28

No

Question 29

Are lump sum orders in matrimonial proceedings provable in bankruptcy?

Answer 29

Yes but unlike other provable debts they are not discharged by the bankruptcy

Question 30

Are obligations arising under an order for periodic payments made in family or domestic proceedings provable in bankruptcy?

Answer 30

No

Question 31

A trustee must give notice of intention to declare a dividend to who?

Answer 31

Those creditors to whom he is aware who have not proved in the bankruptcy