Chapter 6 Flashcards
Before the court will make a bankruptcy order one needs to be proved and how
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
What can the debtor not to do after the presentation of a petition for bankruptcy
They can not sell any goods or property after the petition has been presented unless the court has approved the transaction
Who takes control of the debtors property once the court makes the bankruptcy order
The official receiver takes control
What is the function of the trustee in bankruptcy
To access realise and distribute the bankruptcy estate and to pay the creditors
How does bankruptcy trust work
Every bankruptcy is effectively a trust in that the trustee in bankruptcy holds the bankrupts property on trust for the creditors in general
List the property that does not form part of the bankruptcy order and will not pass to the trustee in bankruptcy
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
At which point can I trust him bankruptcy assign property back to the bankrupt
Once the bankrupt has been discharged
How long do the administers of bankruptcy have to sell the property in which they and adult children live
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
What happens when there is a joint property in bankruptcy
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
There can be no affection unless the court consents where…
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
How much does a creditor need to owe in and secured debt before bankruptcy procedures can commence
£750 however from October 2015 this figure will increase to £5000
What is the role of the official receiver
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
What is the aim of the trustee in bankruptcy
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
What is the order of payment of debts for bankruptcy
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
How long does the bankruptcy normally continue
Normally one year after which it is automatically discharged
What are the things are bankrupt must not do under the restrictions of the order
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
What other things are bankrupt must not do
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
How long before the petition can the bankrupt not to sell an asset for undervalue
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
What is preference is relating to bankruptcy
Rules preventing favouring some creditors over the other this is called preference
Who remains the owner of the investments of the bankruptcy after the bankrupt is discharged
They remain the ownership of the trustee
What are the effects of bankruptcy on investments
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
What is the benefit of the married women’s property act 1882 on bankruptcy
This will make it almost totally protected from the trustee in bankruptcy
What is the effect of bankruptcy and pensions
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
Impact on a trust of bankrupt of a settlor
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
Impact of bankruptcy of a trustee
This has no direct fact of the trust
But it may call into question the person suitability to be a trustee
Effects of bankruptcy on a beneficiary
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
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
Damages awarded against personal injury caused by negligence
Money payable under maintenance matrimonial orders
Outstanding student loans
Fines and debts incurred by fraud
What is a bankruptcy restriction order BRO and what time does it last
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
List the alternative is to bankruptcy
Individual voluntary arrangement
Deeds of arrangement
Debt relief order
Administration order
What is an individual voluntary arrangement IVA
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
What is a deed of arrangement what they also known as
Informal arrangements
family arrangements
Debt management plans
You write to your creditors to agree an informal compromise
What is a debt relief order DRO
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
What is an administration order
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
What are the advantages of an administration order
Only one monthly payment to court
Payment based on what they can afford
Creditors cannot take any further action
List the advantages of an administration order.
1 monthly payment to court
Payment based on affordability
Creditors cannot take any further action without application to court
Disadvantages of a administration order
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
Process of an IVA
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.
How long does bankruptcy last
12 months usually
