Chapter 6

Question 1

Before the court will make a bankruptcy order one needs to be proved and how

Answer 1

The debtors inability to pay must be proved

This can be proved by not complying within three weeks of the statutory demand to pay
They can show that the creditor has sued and had obtained a judgement through the bailiff system to sell their property but they have been unsuccessful in whole or in part

Question 2

What can the debtor not to do after the presentation of a petition for bankruptcy

Answer 2

They can not sell any goods or property after the petition has been presented unless the court has approved the transaction

Question 3

Who takes control of the debtors property once the court makes the bankruptcy order

Answer 3

The official receiver takes control

Question 4

What is the function of the trustee in bankruptcy

Answer 4

To access realise and distribute the bankruptcy estate and to pay the creditors

Question 5

How does bankruptcy trust work

Answer 5

Every bankruptcy is effectively a trust in that the trustee in bankruptcy holds the bankrupts property on trust for the creditors in general

Question 6

List the property that does not form part of the bankruptcy order and will not pass to the trustee in bankruptcy

Answer 6

Tools box vehicles that are required for employment business or vacation

Clothing bedding furniture household equipment and provisions for basic needs of them and their family

Property held by the bankrupt on trust for any other person

Question 7

At which point can I trust him bankruptcy assign property back to the bankrupt

Answer 7

Once the bankrupt has been discharged

Question 8

How long do the administers of bankruptcy have to sell the property in which they and adult children live

Answer 8

They have up to 3 years in which to deal with the bankrupt interest in their main home after that the property will revert to the former bankrupt I will no longer form part of the bankruptcy estate the trustees have three options

Realise the interest

Apply for an order of sale possession

Apply for a charging order over the premises

Enter into an agreement with the bankrupt regarding the interest

Question 9

What happens when there is a joint property in bankruptcy

Answer 9

The trustees May be unable to realise and interest if it is a property in joint names where there is legal
interest or where no legal interest they may have a statutory right of occupation
The property cannot be sold without a court order if they are married with a residential children and cohabitees do not have the same legal rights

Question 10

There can be no affection unless the court consents where…

Answer 10

With the bankrupt as beneficial interest are you entitled to all a part of the proceeds

The bankrupt has a right of occupation and the homes of divide by miners when the petition was presented

Question 11

How much does a creditor need to owe in and secured debt before bankruptcy procedures can commence

Answer 11

£750 however from October 2015 this figure will increase to £5000

Question 12

What is the role of the official receiver

Answer 12

They will investigate the bankrupts affairs when necessary and send a report to creditors
They will call a meeting of the creditors and a vote on the appointment of an insolvency practitioner as the trustee in bankruptcy or when the meeting is held difference receive it becomes trustee in bankruptcy

Question 13

What is the aim of the trustee in bankruptcy

Answer 13

Just realise the assets and divide the proceeds between the creditors
If there is not enough money realised from the sale of the assets the money raised is applied in strict order of priority

Question 14

What is the order of payment of debts for bankruptcy

Answer 14

Secured debts
Expenses of the bankruptcy
Employees wages up to 4 months plus holiday pay/pension scheme contributions
Unsecured creditor including tax and VAT
Interest on debts since BRO
Debts to spouse

Question 15

How long does the bankruptcy normally continue

Answer 15

Normally one year after which it is automatically discharged

Question 16

What are the things are bankrupt must not do under the restrictions of the order

Answer 16

Obtain credit of mine £500 from Belinda

Trade under any name except their current

Act as a director of a company

Work is an insolvency practitioner

Question 17

What other things are bankrupt must not do

Answer 17

Conceal any debts from the trustee
Destroy or falsify records

Peaked false statements

Dispose of property to defraud

Fraudulently give preference to one creditor of another

Leave the country and take any of the property with them

Question 18

How long before the petition can the bankrupt not to sell an asset for undervalue

Answer 18

Within five years before the petition for the court can apply to have the transactions that aside, two years providing the debt is insolvency at the time

Question 19

What is preference is relating to bankruptcy

Answer 19

Rules preventing favouring some creditors over the other this is called preference

Question 20

Who remains the owner of the investments of the bankruptcy after the bankrupt is discharged

Answer 20

They remain the ownership of the trustee

Question 21

What are the effects of bankruptcy on investments

Answer 21

The trustee takes over them and can surrender any isa’s and life assurance bonds or investment if it is a joint account it becomes owned jointly by the trustee and the other owner

Question 22

What is the benefit of the married women’s property act 1882 on bankruptcy

Answer 22

This will make it almost totally protected from the trustee in bankruptcy

Question 23

What is the effect of bankruptcy and pensions

Answer 23

Any rights under a registered pension scheme cannot be claimed this was introduced in the welfare reform and pensions act 1999 for bankruptcy orders made after 29 May 2000
Unregistered pensions such as EFERBS would not be protected

Question 24

Impact on a trust of bankrupt of a settlor

Answer 24

It is not affecting the trust unless it can be attacked under the prior transaction provisions if a petition was presented with a two years of the transaction it can be set aside

Question 25

Impact of bankruptcy of a trustee

Answer 25

This has no direct fact of the trust

But it may call into question the person suitability to be a trustee

Question 26

Effects of bankruptcy on a beneficiary

Answer 26

This does not affect the trust however they could play in the beneficial interest of the property within the trust where the beneficiary has the right to income or capital the trustee in bankruptcy can train this

Question 27

After one year bankrupt is discharged even if the debts have not been paid off in full, which liabilities are not discharged and remain payable

Answer 27

Damages awarded against personal injury caused by negligence

Money payable under maintenance matrimonial orders

Outstanding student loans

Fines and debts incurred by fraud

Question 28

What is a bankruptcy restriction order BRO and what time does it last

Answer 28

This is where the bankrupt has acted dishonestly the order can last for a minimum of two years maximum of 15 years
This must be requested within one year of making the bankruptcy order
The court can place an interim order

Question 29

List the alternative is to bankruptcy

Answer 29

Individual voluntary arrangement

Deeds of arrangement

Debt relief order

Administration order

Question 30

What is an individual voluntary arrangement IVA

Answer 30

Informal voluntary arrangement with creditors to pay all or part of the debt. This may be done through an insolvency practitioner any creditors holding more than 75% of the total debt can accept terms for all.

All creditors are bound by approved IVA they last five years

Question 31

What is a deed of arrangement what they also known as

Answer 31

Informal arrangements
family arrangements
Debt management plans

You write to your creditors to agree an informal compromise

Question 32

What is a debt relief order DRO

Answer 32

These are suitable for people on low income is the few assets and relatively low that they usually last for 12 months during which time the creditors cannot take any action to recover their money
After the 12 months the order is released and freed from their debts if they meet the following conditions-
Unable to pay their debts
Disposable income not more than £50 per month
Domiciled in England
Not of been subject to another order within the last six years
Not involved in another formal insolvency procedure

Question 33

What is an administration order

Answer 33

This is where creditor has obtained a County Court judgement the court can make an administration order as an alternative to bankruptcy
The client must make regular payments to the court
Only used where debts are under £5000
Need to be in receipt of a regular monthly or weekly salary

Question 34

What are the advantages of an administration order

Answer 34

Only one monthly payment to court
Payment based on what they can afford
Creditors cannot take any further action

Question 35

List the advantages of an administration order.

Answer 35

1 monthly payment to court
Payment based on affordability
Creditors cannot take any further action without application to court

Question 36

Disadvantages of a administration order

Answer 36

It will fail if you miss
a payment
Registered as CCJ so effects credit rating
Must be less than £5000 and a CCJ in order

Question 37

Process of an IVA

Answer 37

Debtor must make proposal to creditors
A grant of an interim order which prevents the bankruptcy petition if creditors are hassling
Creditors who hold 75% of debt must be in favour
IAV will last 5 years or by the supervisor giving notice to the creditors.

Question 38

How long does bankruptcy last

Answer 38

12 months usually