Personal Insolvency

Whether you need help or advice on Annulment or Rescission of Bankruptcy Orders, Planning for Bankruptcy, Individual Voluntary Arrangements, Bankruptcy Offences, Claims by Trustees for Interests in Property, Preferences, Transfers at Undervalue, Defrauding Creditors or General Insolvency Advice.

It can prove to be a stressful time but at PLS our experienced Personal Insolvency Teams are here to ensure that it’s as smooth as possible.

Planning for Bankruptcy

Financial difficulties are a sad fact of life and can arise in both business and personally. Whether it arises due to credit card arrears, trade debtors, cash flow, personal guarantees, mortgage arrears, bank loans or otherwise, the consequences can be serious and in extreme cases can result in the forced sale of property, bankruptcy.

However, proper planning and advice can help reduce and even remove the risks. The earlier steps are taken the greater the prospects of minimising the impact if things go wrong.

 

Annulment / Rescission of Bankruptcy Orders and Appeals

Annulment

An order annulling a bankruptcy order effectively cancels the bankruptcy and places the former bankrupt back in a position of not having been made bankrupt.

A bankruptcy order can be annulled by the court if:-

  1. at any time it appears to the court that the order should not have been made on grounds that existed at the time the original order was made;    or
  2. the debts and expenses of the bankruptcy have been either paid in full or secured to the satisfaction of the court since the making of the order.

Rescission 

A court may review, rescind or vary a bankruptcy order and the grounds are similar to those governing annulments. Reasons can include new information or a change of attitude by the petitioning creditor.

Appeals

If a bankruptcy order has been wrongly made the order can be appealed but to succeed, it is necessary to show that there was a err in principle or law by the judge when  exercising his discretion.

Issue / Setting Aside Statutory Demands

Statutory Demands are commonly used to recover debts owed by individuals (and also companies) in England and Wales, which are over £5,000, undisputed, liquidated and payable either immediately or at some certain future date. Once served, an individual has 21 days to pay the debt or reach agreement for payment or 18 days to apply to the court to set aside the demand. Failure to do anything within the periods, allows a creditor to present a bankruptcy petition to the court.

The service of a Statutory Demand can be an effective means of recovering a debt (or debts) but it is also a mechanism frequently used and abused by creditors and those instructed to pursue debts.

Purchase of Trustees Interest in Property

On the making of a bankruptcy order, all property (save for minor exceptions) owned by the bankrupt, is automatically vested in the Official receiver / Trustee in Bankruptcy who is under a duty to realise the value of the assets for the benefit of creditors.

The main assets is usually the family home and normally after 12 months from the date of the bankruptcy order, a trustee will seek to recover their interest either by inviting the joint owner to buy or by application to the court for possession and sale.

Bankruptcy Offences

In the event of bankruptcy, certain restrictions and obligations are imposed on a bankrupt which if breached can give rise to both criminal (resulting in imprisonment/fines) and/or civil proceedings.

Such offences include the following:-

  1. Non-disclosure  –  failure to disclose assets.
  2. Concealment of Property  –  intentional failure to disclose assets.
  3. Explanations  –  failure to account for loss of property in the period 12 months before the presentation of a petition or failure to give  a satisfactory explanation of how much was lost
  4. Books and Papers  –  failure to deliver, or prevention or concealment of deliver up, books and records etc, including destruction, falsification etc.
  5. False Statements  –  making a material omission or false statement.
  6. Fraudulent Disposal of Property  –  making a gift or transfer of, or granting charge on, property.
  7. Absconding  –  leaves or attempts to leave or prepares to leave England and Wales with any property.Fraudulent dealing in property obtained on credit  –  disposing of property obtained on credit.
  8. Obtaining Credit or Engaging in Business  –  taking credit above set limit or engaging in business under another name without disclosing bankruptcy.
  9. Failure to Keep Proper Accounts  –  if in business prior to bankruptcy, not keeping proper accounts.
  10. Gambling  –  increasing debts by gambling.
  11. Being a Company Director  –  an undischarged bankrupt cannot be a company director (whether directly or indirectly) or otherwise concerned in the management of a company, without permission of the court.

 

Suspension of Automatic Discharge from Bankruptcy

Discharge from bankruptcy normally occurs automatically 12 months after the dated bankruptcy order was made by the court. A certificate of discharge can be obtained from the court upon payment of a fee, which can be produced as evidence of discharge.

However, in certain circumstances, the automatic discharge can be suspended either for a set period, or until compliance with certain requirements or, in extreme cases, indefinitely. Bankrupts have a number of obligations imposed upon them and if they fail or refuse to comply with these obligations then the Official Receiver or Trustee can apply to the court to suspend. The most common reasons include non-cooperation, obstruction, misinformation, delay and failing to provide information/documents.

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