Bankruptcy and Property Charges £14K

[GuidoT]

A statutory demand was personally served on my behalf last October 2007 for debts totalling £14K that accrued in 2006.

There was no response to the statutory demand and a process server is about to serve the Bankruptcy petition, the hearing has been scheduled for the end of February 2008.

I am concerned that if he is made a bankrupt that I will recover only part or nothing of the £14K.

I was thinking if I could place a charge on his property (he is a developer) I stand a greater prospect of recovering the debt. Can anyone assist me with this, is this even possible given I do have not judgement?

Am I barking up the wrong tree?

[sequenci]

Originally Posted by GuidoT

I was thinking if I could place a charge on his property (he is a developer) I stand a greater prospect of recovering the debt. Can anyone assist me with this, is this even possible given I do have not judgement?

Am I barking up the wrong tree?

If he has property, providing there is equity you should get your money back. Bankruptcy could be way quicker than going for a charge which could sit on the property for years and years and years.

[GuidoT]

I am concerned that if he is made bankrupt I will not obtain all the £14K or nothing at all. Prior to the bankruptcy I would like to place a charge on his property or is this not possible?

The individual has more than one property so I presume through the bankruptcy will force sale these - I realise the difficulties I will have with his home.

I cannot believe he is going to allow himself to be made bankrupt, he has several properties and seems to have so much to loose, it just does not make sense.

[GuidoT]

Found the answer myself.

You can only get a charge if you have a judgement debt.

You cannot make someone bankrupt if you have security, i.e. a charge.

So no and no.

[sequenci]

If it was me, I would make them bankrupt. It's much quicker for you to get your money back.

[GuidoT]

That is what I intend to do in just over a months time, unless the debt is discharged.

[Killerschick]

Bankruptcy may be quicker but it's more risky, especially if you don't know what other debts this person has (as you point out you could end up with nothing). This is why most creditors/DCA's favour a charging order but then they are companies who can afford to wait for payment (and charge plenty of interest in the mean time!).
If your priority is quick payment bankruptcy may be for you and the threat of it may prompt a last minute payment. Bear in mind that if it proceeds the trustee will be in complete control of everything and you will then have to sit back and wait for payment. Also bear in mind that the trustee has up to three years to deal with the estate (if there are property assets - which seems to be the case here) so not always that quick if the debtor doesn't play ball and they have to take the legal route to force a sale or repossess.

[GuidoT]

A lot has happened, so I thought I would update this thread.

Went to court last month and the defendant stated that he i) sought to set aside the statutory demand ii) responded to the petition and iii) the debt relates a limited firm and that cheques previously raised related were from his limited company.

The judge therefore adjourned the hearing, giving him the benefit of the doubt, until the end of next month given the seriousness of the matter and that it is a relatively small sum to be made bankrupt for.

The judge asked the defendant to provide the paperwork to support his position, suspiciously he did not have it with him.

Anyway the defendant yesterday made an application to set aside the statutory demand (for the first time) it is around 3 months late and the grounds are a nonsense. Additionally I have a copy of one of the cheques and is it from him personally, unfortunately I do not have them all. Basically he mislead the court.

Recently he has made some vague offers to settle over the period of a year, but I want to serve the new hearing documentation on him remind him of the position, then I will draw up a settlement agreement with staged payments and see if that is accepted, otherwise back to court and he faces bankruptcy.

Hopefully, he does not fancy the prospect of being bankrupt and will settle, but if he does not then the petition to make him bankrupt will proceed, even if that means the inevitable that I will get nothing and spend about £5K in fees and legal costs during the process.

[GuidoT]

An update.

Had another hearing last week, he failed with his application to set aside the statutory demand and the judge says he was 'making it up as he went along' and was about to make him a bankrupt but there was a typo on the petition, so the matter is adjourned for another hearing.

He had counsel at the hearing and they did not pick this typo up, but the judge did.

This inadvertent typo was fortunate.

He came back today with an offer to settle over a period of time that I can now accept, the alternative is bankruptcy = nothing for me.

[GuidoT]

Just to complete this thread.

Settlement terms now agreed, essentially to pay instalments over 2 years with £3K now. He is going to pay costs and interest of £6K too.

I will just have to wait and see if he pays, in the meantime the bankruptcy will be stayed until the final debt is paid off.