Personal Insolvency Flashcards
Not provable debts
Secured debts student loans Foreign (non-EU) taxes matrimonial periodic payment fines child support payments
provable debts but not discharged
matrimonial lump sum
Fraud
damages for personal injury
Provable debts
Debts to which Bankrupt was subject at date of order
Debts to which Bankrutpt became liable as a result of an obligation pre-dating the order
interest up to the date of the order
Time for removal from bankruptcy register
Annulment (never should have been ordered) immediately upon receipt of notice of annulment order
Annulment (fully paid or IVA) 2 years of annulment order
Discharge 5 years of BK order
Grounds for BRO
failure to keep records that account for loss of property by BK/his business in last 2 years
failure to produce records on demand from OR/TiB
TUV
preference
excessive pension contribution
failure to supply services/good which have been paid for in advance
wrongful trading
incurring debt with no reasonable expectation of being able to repay
faillure to account for loss of property
Gambling/rash and hazardous speculation/unreasonable extravagance contibuting to bankruptcy
neglect of business affairs
Fraud
Failure to cooperate with OR/TiB
BK in last 6 years
Who can apply for BRO
Secretary of State or OR
Application deadline for BRO
Within 1 years of BK order
Grounds for annulment of BK
- On any grounds existing at the time of the order, the order ought not to have been made
- BK debts and expenses are paid in full or secured to satisfaction of the court
- IVA is approved
TiB’s investigative powers
Power to:
- seek decision from creditors (s. 314)
- summon committee meeting
Apply to court for
- Public examination (s. 290)
- Private examination (s. 366)
- power of arrest (s.364)
- seizure of BK’s property, books, papers and records (s. 365)
Power to:
- demand docs from HMRC (s. 369)
- redirect mail (s. 371)
- Obtain Land Registry entities
Court factors to consider in possession hearing
- interests of BK’s creditors (primary after 12 months)
- conduct of spouse/former spouse in contributing to BK and their needs and resources
- Needs of children and dependents
- all circumstances of the case (except BK’s needs)
Assets excluded from BK estate
- Tools, books, vehicles and equipment necessary for BK’s employment, business or vocation
- clothing, bedding, furniture, household equipement and provisions necessary to satisfy basic domestic needs of the BK and his familiy
- Property on trust for another
- income for reasonable domestic needs (otherwise claimable under IPO/IPA)
- after acquired property
- Assets subject to forfeiture clauses
- peerages and titles of honour
- personal correspondence
- rights under an approved pension scheme
- damages in respect of pain, suffering, defamation and hurt feelings
Consents from creditor’s committee in bankruptcy
TiB appointing the BK to:
- superintend the management of the estate
- carry on the business for the benefit of the creditors
- assist in the administration of the estate
Sanction a division and distribution of property in specie
Obligations of Bankrupt
- deliver to OR/Trustee all books, papers and records which he has in possession or control
- deliver possession of the BK estate to the OR/TiB
- Provide accounts for past 3 years (if running a business)
- SofA within 21 days of request
- Notify of any after acquired property within 21 days
- attend public or private examinations if requested to do so
- attend creditors’ meetings
- six monthly provison of info on sales, purchases, profits and losses of business
Disabilities of bankruptcy
- director disqualification
- professional disqualification
- disclosure of bankrupt trading name
- disclosure of BK status when obtaining credit of more than £500
- partnerships dissolved (unless partnership agreement provides otherwise)
- May be liable for BK offences
- duties of cooperation and provision of documents and estate possession to OR/TiB
- Post petition dispositions are void. s. 284 IA
Duties of Trustee
- get in and take possession of the estate (s. 305)
- realise the assets of the estate for distribution in the statutory order of priority and turn over any surplus to BK
- Pay cash receipts into ISA (within 14 days or immediately if over £5k)
- prepare and send progress reports
- take possession of books, records
- call meeting of creditors if requisitioned
- prepare a separate financial record and retain for 6 years
- send to SofS upon request account of receipts and payments
Protocol IVA - types of debtor appropriate for
- in receipt of regular sustainable income
- 3 or more lines of credit from 2 or more creditors
No disputed debts
No investment properties
No possibility of full and final settlement in first year
Protocol IVA - emergency expenditure/unforeseen reduction in income. Conditions for payment holiday
- Full details of inability to pay provided to Supervisor’s satisfaction
- In total no more than 9 month’s payments can be agreed to be missed
- IVA duration extended by no more than 12 additional months to allow debtor to make up the shortfall
Protocol IVA - Supervisor options on breach
Within 28 days of breach
Terminate or seek creditors’ view where appropriate on:
- variation of IVA terms
- Issue a certificate of termination to end IVA by way of default
- petition for bankruptcy
Protocol IVA - redundancy
- Inform supervisor within 14 days of:
- redundancy
- amount of any redundancy payment - Pay over redundancy paymen in excess of 6 months’ salary
- Keep up monthly contribution where possible
- Keep supervisor informed of employment status
Protocol IVA - overtime, bonus or commission
- report to supervisor within 14 days if sum exceeds 10% of normal income
- 50% of amount of 10% of normal income to be paid to supervisor within 14 days of disclosure
- degault if failure to disclose or pay. Can remedy but IVA cannot be extended by more than 6 months to allow for recovery of sums due to remedy breach
Protocol IVA - what needs to be formally verified
- secured loan (mortgage/bank statements)
- Rent (tenancy agreement or bank statement)
- Council tax (council tax statement or bank statement)
- Vehicle finance (relevant HP agreement)
- Pension (pension scheme docs or wage/slip contribution statement)
6 Other financial commitment eg. endowment policies, life policies, health insurance and PPI (reference to appropriate documentation)
Protocol IVA - pension contributions
If under 55, minimum contributions only
If over 55, average of last 6 month contribution s.t. no more than £75 above minimum contribution or max 4% of gross salary
Protocol IVA - remortgage criteria
- Maximum 85% LTV
- incremental cost is no more than 50% of monthly contribution at review date
- New worth release is not more than 100p in £ of creditors’ claim excluding statutory interest
- remortgage term does not exceed later of state retirement age or existing mortgage term
- Amount of money introduced will be mortgage proceeds less costs of remortgage (inc. costs of redeeming existing mortgage)
£5k de minimis
Grounds for Supervisor presenting a bankruptcy petition
- failure to comply with obligations under the IVA
- false or misleading material information or making a material omission in any document at the creditors’ meeting
- failure to comply with supervisor’s reasonable request
