Shocked at some of the bankruptcy "advice"...

[seylectric]

Sorry but having read through a number of threads on here, I felt I had to post this. I feel it is important for people to realise that if you apply for, or are made bankrupt, even for a relatively small amount, and you own your own home or have some equity in it, you may lose the lot.

 

I have posted details of our case, dating back to December '06, elsewhere so I'll keep this as simple as possible, but it's still a long read I'm afraid, but an important one I feel.

 

My partner, who solely owned the house and had around £65,000 of equity, was made bankrupt for council tax arrears totalling around £4,000 in December '06. The total was around £6,000 with other creditors added on.

 

To cut a long story short she didn't receive the statutory documents prior to bankrupcy, so wasn't aware of the bankrupcy until after it happened. If we had been we could have applied for a loan at that time. We appealed at court (because she hadn't received the statutory documents), but with the help of the OR the council won the case because the debt hadn't been repaid (in otherwords they would have reapplied anyway had they lost).

 

12 months came and went, and with the trustees demanding to know how she was going to repay the debt, and the property having been transferred to them so to speak (sorry, I don't know the correct terminology), we sought further advice from our solicitor (who was less than useless) an he advised we go into an IVA which she did in December 07. Their illustration showed that she would pay around £20,000 under an IVA, more than double that under bankrupcy, but in any event we couldn't get a remortgage to repay the debt so the IVA failed, though it ran the full 12 month course - the deal being that she repaid the debt witin 6 months or sell the house to repay it.

 

Because the IVA failed the issue was referred back to the trustee (who had been appointed by the OR) earlier this year. They told us that they had, by law, to realise the assets of the property within 3 years of the bankrupcy to pay off the debts. So we put the house on the market at a knockdown £70,000 - £20,000 less than it's value, and sold it at the end of July. Around half of that went to pay of the mortgage outstanding, and the cheque went to the trustees. Their bill (along with their solicitors and the debts etc.) totalled about £29,000 but the interest is still being added.

 

At that time they stated that they now had to advertise for any other creditors to come forward for 21 days, after which she will get anything that remains.

 

So a £4,000 debt has cost us:

 

Our home

£20,000 in lost value because of the need to get rid quickly

£29,000 + whatever to the trustees

£1,000 estate agents fees

£900 house-sale solicitors fees

£3,000 I paid to the IVA people upfront, most of which only covered their fees

£2,350 in solicitors fees which has been a complete waste of money.

 

Total = £56,250, not including the £35,000 owing to the mortgage company

 

The stress has been hell and still affects me badly, and if anything we will only see maybe a few hundred pounds from the property. 3 years had a few debts but were scraping through, but had £65,000 equity. Now we have nothing.

 

Bottom line is you SERIOUSLY need to know exactly how much bankrupcy will cost you if you have assets or equity before considering it, it's not cheap, it's not painless and it is definately a last resort rather than an 'easy' out.

 

Please read the Default bankruptcy: protracted realisation unit & bankrupts for more information on this. I can't add any more advice, other than if you think the debts disappear after the bankrupcy has been annuled after the intial 12-month period you need to be aware that it is NOT the case, they still have to be paid regardless if the trustee holds your assets together with huge fees and interest.

Edited September 2, 2009 by seylectric

[toddle2u]

It would seem you received bad advice all the way along which cost your partner more than it should of done. However I feel that the title of your post is unwarranted and uneccesary as the majority of advice given on this site is probably better than you would get from a soliciotr (as shown by your story).

 

However, I also believe that there are parts of your story that cannot simply be true.

 

To cut a long story short she didn't receive the statutory documents prior to bankrupcy

Prior to a bankruptcy order being issued a Statutory Demand has to be personally served on the debtor. If this is not done the creditor has to prove to the Judge that all attempts to serve the SD have failed and service can be permitted by post. If this was not done the Judge would not have issued the BRO under any circumstances. I find it very difficult to believe that your partner knew nothing of the BRO. As it was a CT debt I am guessing they at least had her right address

 

we sought further advice from our solicitor (who was less than useless) an he advised we go into an IVA which she did in December 07

 

You cannot enter an IVA whilst in bankruptcy and I cannot believe a solicitor woudl advise this. Unless you didn't get this advice from a solicitor but from an unqualified IVA ambulance chaser. Which would seem the case as you state you paid them £3k upfront.

 

the IVA failed, though it ran the full 12 month course

IVA's run for 5 years and any equity in the property is normally released in the 3rd year.

 

Your 'story' is not a true reflection of what happens in BR and your situation has been caused by your naivety and poor advice and nothing to with any advice received from this forum.

[noomill060]

Three years ago we were still finding our way to get banks to comply with our Subject Access Requests and then how to go about reclaiming bank and credit card charges- no one on here knew what Statutory Demands were, never mind how to get them set aside.

 

I remember someone had a sig which said something like "Be careful of accepting legal advice from a complete stranger- verify everything by your own research before acting on it"

[Dodgy Geezer]

This is a very sad story of which i am very sorry to hear about.

 

However, i find it hard to believe that you did not heed all the warnings from all the correspondence that you must of received.

You will have received, over a matter of time, many, many letters from various people regarding your liability.

 

To cut a long story short she didn't receive the statutory documents prior to bankrupcy, so wasn't aware of the bankrupcy until after it happened.

YOU or ANYBODY has a right to have the BR set aside or even annulled if the papers are not served correctly.

 

I had a petition thrown out in court by a judge because it was not served properly.

 

Because the IVA failed the issue was referred back to the trustee

 

There is also an arrangement available after Bankruptcy called a

" Fast Track Voluntary arrangement " . It is only available to Bankrupts, and is only available through the Insolvency Service.

 

I am over 9 months into my own Bankruptcy, and to date, with all the wonderful advice that i have received, it has not cost me a penny.

I still have my own solely owned property that is with the trustee. I still live there, and still pay the mortgage. That does not mean that it will not have to be sold eventually, it just means that the reality of Bankruptcy is nothing as you have described it.

[debtinfo]

With such a small debt, surely you should have got an annulment via paying the debt at the start when the fees would have been very low compared to what you paid. The OR does not assist the creditor anymore than they will assist you, all they do is provide a report to the judge of your conduct whilst bankrupt including any co-operation. Since we have been in the biggest ressecion for years surely the drop in your house price is in line with the general market. If you could not pay the debt to get the annulment then they had every right to go for bankruptcy as this is the ultimate way to be repaid if the person has assets but has not paid a debt

[seylectric]

With all due respect you can believe what you like. Many people have told us that this doesn't happen this way, but what I have told you is 100% true. I have no reason not to be totally honest, it doesn't matter now anyway.

 

We did NOT receive the Stat documents, and on the advice of the solicitor (who said he wouldn't need to attend) I went to court on behalf of my partner to have the bankruptcy annulled. We found out later that the guy who serves the documents, who was apparently based 300 or so miles away, had stated that he had been unable to serve the documents personally and had been granted permission to serve the documents through the letterbox. His description of the property didn't match - he described it as a Victorian terraced house, it wasn't Victorian and it was a semi-detached. To this day I believe that all along he had been going to the wrong house.

 

At the hearing there were two people there, one from the council and one from the OR's office. The youngish guy from the council looked as though he had never been in court before and said little or nothing. The OR did all the talking and said they opposed it on the basis that the debt hadn't been paid. the judge agreed, that was basically it.

 

I had actually gone to court somewhat unprepared anyway as I had gone to ask for an adjourment as my partner was recovering from an operation so could not attend, having spent much of the previous 3 years in and out of hospital and a full year off work, which was part of the reason why a lot of arrears had built up.

 

Correction: The bankrupcy order was made on 22 November 2006.

 

On 13 Noveber 2007 an application was made to the court by the trustee to get a "temporary suspension of the automatic discharge from bankrupcy" as nothing had been paid - at this time we were still negotiating with the solicitor who insisted he was dealing with the issue and now advised an IVA. The IVA was signed on 21 December 2007, the agreement was that the debt be paid off within 6 months and if not we would put the property up for sale to repay the debt. Even after the IVA was signed we tried to remortgage but were told that the bankrupcy had not been annuled even though we were in an IVA. There is still some confusion as to whther it was or not.

 

You cannot enter an IVA whilst in bankruptcy and I cannot believe a solicitor woudl advise this. Unless you didn't get this advice from a solicitor but from an unqualified IVA ambulance chaser. Which would seem the case as you state you paid them £3k upfront.

The solicitor we used was recommended the IVA people. When they visited on 21 December we were told that if we did not sign there and then, we would be too late and they would not be able to prevent the house being repossesed. They also said it was ultimately up to the creditors whether the IVA was accepted or not and it would help if we could pay something upfront "to show willing" and we paid the £3,000 we had saved, which was earmarked towards paying off the debt anyway.

 

OK obviously on hindsight we were badly advised, but at the time we simply followed the advice of the solicitor who seemed to know what he was talking about. There is a long thread on the issue elsewhere on the board.

 

I stand by my original post and title because THIS HAS HAPPENED TO US regardless of what anybody chooses to believe, and if you are badly advised it could happen to you too.

 

ORIGINAL THREAD HERE

Edited September 9, 2009 by MARTIN3030
removed identifiers.

[seylectric]

With such a small debt, surely you should have got an annulment via paying the debt at the start when the fees would have been very low compared to what you paid. The OR does not assist the creditor anymore than they will assist you, all they do is provide a report to the judge of your conduct whilst bankrupt including any co-operation. Since we have been in the biggest ressecion for years surely the drop in your house price is in line with the general market. If you could not pay the debt to get the annulment then they had every right to go for bankruptcy as this is the ultimate way to be repaid if the person has assets but has not paid a debt

 

We couldn't pay the debt at the start but since we hadn't received the Statutory documents we were focused on getting an annulment on that basis at the time - this was what Citizens Advice told us to do, at which point we spent some time looking ofr a solicitor. Most solicitors we contacted were only interested in dealing with the bankrupcy and not getting it annuled. Prior to all this happening we did apply for, and were provisionally granted, a loan in June 2006 but I phoned the council to ask for a settlement figure - we didn't want to apply for any more than we needed - but they said that the issue had "gone too far" and we would be hearing from their solicitors so we waited. We heard nothing until we got the bankrupcy order from the court.

 

Back in 2006 the house was valued at £110-115,000. The £90,000 figure ios as a result of the rescession.

[Dodgy Geezer]

Have a read through this site.

 

Piggy's Site - Bankruptcy Advice

 

Give them a call for free advice.

 

Good Luck.

[seylectric]

Have a read through this site. The problem is the vast majority specialise in what to do before it happens - we didn't have that choice.

 

I still believe

 

Piggy's Site - Bankruptcy Advice

 

Give them a call for free advice.

 

Good Luck.

 

Thank you, I may do that although I must have read through just about every bankruptcy advice site on the internet and then some. The problem is our case is a little bit unique in that we didn't know about the bankruptcy until after it happened - most if not all advice sites deal with how to make yourself bankrupt or what to do if it is going to happen. I still believe that we have a valid case in that it was illegal because the correct docs were not served; I don't believe the server came up from Norwich and travelled 300 miles or so every time and I believe he lied on the paperwork (i.e. the description of our house). I also believe that the OR should not have been present at court, and that they are liable in some way for influencing the judges decision. I also believe we have a very strong case against the IVA company, who seriously misled us about the cost if we entered into the IVA v. the cost under bankruptcy, and for not offering my partner a better deal than one year even though they knew she was on a minimum wage and had a lot of time off for sickness. The trouble is without finding a top lawyer to try and do something about all this and the money to pay him we're stranded in the current situation. As it stands we're just trying to move on and rebuild - we have no other viable option.

 

 

Three years ago we were still finding our way to get banks to comply with our Subject Access Requests and then how to go about reclaiming bank and credit card charges- no one on here knew what Statutory Demands were, never mind how to get them set aside.

 

I remember someone had a sig which said something like "Be careful of accepting legal advice from a complete stranger- verify everything by your own research before acting on it"

I know. I was a member early days when the site was known as the 'Bank Action Group'. I also do a lot of my own research as well as asking and was one of the people who helped that euro-mp (whose name escapes me for the moment) who forced the local council to change the illegal wording on their PCN's which then referred to an "offence". I also run a reasonably successful business which I have managed to keep going throughout this mess despite my head being all over the place, though like most businesses the recession has hit me, but I am making enough to live on. All I'm saying is I'm not your average clueless numpty who jumps into things blindly, and I spoke to a LOT of solicitors and advice people before deciding xxxxx who came highly recommended from a large Manchester concern who dealt with corporate bankruptcy. I also spoke to the Bankruptcy Advisory Service, although their advice, such as it was, came too late. xxxxxx were the ONLY people I found at the time though that said this could be overturned, which ultimately it wasn't.

 

Generally speaking, we were just unlucky and that's the point of the thread. Far from being misleading, I wanted to point out that - even WITH advice and a solicitor, bearing in mind that you pretty much have to assume they know what they are doing unless you know better, and most people don't - it could happen to anybody. We're obviously not xcxxxx only customers!

Edited September 9, 2009 by MARTIN3030
removed identifiers

[toddle2u]

Generally speaking, we were just unlucky and that's the point of the thread.

I beg to differ the opening title and paragraph suggest otherwise.

 

I also believe that the OR should not have been present at court,

You were BR at the time of the hearing and the OR was therefore managing your affairs. He had every right to be there.

 

From what you have stated I would say you have a claim against xxxxx I would take it to FOS, FSA and OFT.

Edited September 9, 2009 by MARTIN3030

[seylectric]

Generally speaking, we were just unlucky and that's the point of the thread.

 

I beg to differ the opening title and paragraph suggest otherwise.

 

In what way? Would you care to elaborate?

 

I also believe that the OR should not have been present at court,

 

You were BR at the time of the hearing and the OR was therefore managing your affairs. He had every right to be there.

 

I disagree. The point of the hearing was to have the BR annulled because the correct procedure, a legal requirement, had not been followed i.e. the Stat documents had not been served on us in any way. At that point (the time of supposed serving of the docs) the OR was NOT involved, and thus was not in a position to give any evidence to the contrary.

 

You are questioning what I have said but I, or my partner at least, is living proof that an IVA can be entered whilst in bankrupcy because that was exactly what happened.

 

You also categorically state that IVA's run for 5 years, well ours didn't, a simple but true fact. If anybody is misleading anybody here it's you, to date you have accused me of being dishonest and are ignoring the facts presented. I'm just pointing out what CAN happen

 

Your 'story' is not a true reflection of what happens in BR and your situation has been caused by your naivety and poor advice and nothing to with any advice received from this forum.

 

My "story" is 100% true, I have all the documents to prove it and at no point have I stated it is as a result of advice received on this forum. All I am pointing out is that if people with equity enter into bankruptcy this is what CAN happen because it HAS happened to us, and that if people are stating "all your worries are over" etc. if you enter into bankruptcy in these circumstances then that is not necessarily good and thorough advice.

 

I am a long time member of and avid supporter of this forum, I have no reason to post anything that isn't true and accurate and spent some time going through the documents again to make sure I had got it right. If you are telling me otherwise you are wrong because we've been there. I'm not looking for the sympathy vote but we sought an awful lot of advice on and off here and at the end of the day you can only go with what you are advised to do by a seemingly experienced solicitor, which is what we did. The rest is history but after all we have been through I resent the implication that I am not telling the truth.

[toddle2u]

I can't be bothered to get in to an arguement over this I have made my points and stick by them. However, I will illustrate one point where you only see what you want to see

 

Quote:

I also believe that the OR should not have been present at court,

 

You were BR at the time of the hearing and the OR was therefore managing your affairs. He had every right to be there.

I disagree. The point of the hearing was to have the BR annulled because the correct procedure, a legal requirement, had not been followed i.e. the Stat documents had not been served on us in any way. At that point (the time of supposed serving of the docs) the OR was NOT involved

 

I repeat that at that point you were BR and was managing your affairs

[sillygirl1]

I think toddle2u may have a point somewhere but I can't see why they have to be so aggressive at getting their views across.

 

I am looking at being bankrupt, I have no assets (house already reposessed) and am being shoved towards an IVA, I have pointed out to the relevant people that I have already failed on a DMP and IVA so going into another one serves no purpose. These 'sharks' also said they could fill in the paperwork for me for £350 - money which could be better off going towards the £510 fees needed to go bankrupt.

 

Why should I go into an IVA when three of the debts are unproven amounts and contain dubious fees (mortgage shortfall especially) when bankruptcy is clearly a better option - my salary being 'so high' is the answer! I am not on a particularly high salary (£28,000) compared to some but I have no assets and no other 'means' contributing to my salary. Once housing costs and 'reasonable' living expenses are taken into consideration I have a 'surplus' of about £250-300, of which I've been paying off some smaller creditors, paid off 6 in the last 18 months who could prove that I owed them, 4 others were not even owed as original sums had been cleared and only passed to DCAs 'by administrative error'....

 

I agree with the original poster that some companies misues bankruptcy and the whole process service, one tried to serve a Stat Demand on me at my fathers house as they 'had reason to believe' I had a substantial share of the property - they were seen off too much to the disgust of the judge at the hearing they forced through, costs still being sought on that one!

[seylectric]

My point about the farce of a hearing is that I was arguing a point - that the bankruptcy should not have occured because we didn't receive the Stat Demand - at THAT stage we (or to be accurate, my partner) was NOT bankrupt and therefore at that point the OR was not involved - they only came into play later and that should have been taken into consideration, hence taking the OR out of the picture.

 

In otherwords the OR was there because we were bankrupt, but the issue was that we shouldn't have been because the Demand wasn't served, hence nullifying the OR's case. This should have been between us and the council, not the OR.

 

Anyway that's my argument, we will be looking into taking the IVA people on though at the very least.

[toddle2u]

at THAT stage we (or to be accurate, my partner) was NOT bankrupt and therefore at that point the OR was not involved

 

But you partner was BR at this point (which strangely you go on to confirm in the next paragraph). Whether they should have been or not is irrelevant as they WERE. Hence the OR had a right to be there. Your argument that the OR shouldn't have been there because your partner shouldn't have been BR does not hold because at that point they were BR and the OR was managing your partners financial affairs.

 

As i see it your only route is to go after the IVA people.

 

Sillygirl the reason that the posts may seem aggressive (though not intended) is that the OP has questioned the advice given in these forums (in title of thread and opening paragraph) with no just cause. I have read their previous thread about this and the OP had a very blinkered view and seems to have taken very little heed of the good avice given

[debtinfo]

It is standard procedure that the OR is asked to present a report about the conduct of the bankrupt between the order date and the court date in an annulment and this can affect whether an annulment is granted, Did you co-operate with the OR during this time, even if you thought that the bankruptcy should not have taken place. On the other hand it does seem that you had a good case that the serving was not done correctly, perhaps the problem is with the advice you received about challanging it, did you take a solicitor with you to court

[seylectric]

It is standard procedure that the OR is asked to present a report about the conduct of the bankrupt between the order date and the court date in an annulment and this can affect whether an annulment is granted, Did you co-operate with the OR during this time, even if you thought that the bankruptcy should not have taken place. On the other hand it does seem that you had a good case that the serving was not done correctly, perhaps the problem is with the advice you received about challanging it, did you take a solicitor with you to court

 

We co-operated with the OR throughout. The bit in bold, that's my point - the crucial issue here is that the bankruptcy should have been annulled because we didn't receive the relevant documnets which is a LEGAL REQUIREMENT but this issue has been ignored throughout. The solicitor sent a letter to court outlining the facts and said that it wasn't necessary for him to attend, it was that straightforward. Whilst I was unimpressed ultimately, he seemed to know what he was doing at that stage, all we could do was go along with the advice given although I have to stress that I primarily went to court to ask for an adjournment as my partner was too ill to attend having only recently been discharged from hospital, but my request for that adjournment was rejected. To this day I don't understand why that was or why the main issue wasn't considered by the courts.

 

toddle, I really don't understand your attitude. I did not have a blinkered view at all, I spent days and even weeks seeking extensive advice on here and via CAB and a number of solicitors before eventually hiring who I thought was the right one, and rang the helplines from just about every bankruptcy advice website I could find. All the letters from 'ambulance chasers' went straight in the bin.

 

The bottom line is I don't see what I could have done differently, other than ensuring that a solicitor had been present but hey, hindsight is a wonderful thing.

 

You state that I have question the advice given in the forums, that is correct. There IS just cause because we have become victims of a bankruptcy that should never have been allowed to stand according to the law, and a lot of the advice on here suggests that it may be an easy way out. All I am saying is it may not be - we are living proof that it CAN go awry even if you seek what you believe to be good advice. We trusted a recommendation from a very big firm that only dealt with corporate bankruptcy and it didn't work out for us.

 

This thread was never intended to be a debate on our own situation, just a warning to people to be careful and not take it with a pinch of salt that bankruptcy is an easy option. I have no wish to get into a slanging match, It's too late for us now anyway, what is done is done so I have nothing to gain personally from this. I just wanted to warn others and no matter what anybody else says, I repeat for the last time - THIS DID HAPPEN.

Edited September 5, 2009 by seylectric

[MARTIN3030]

Three years ago we were still finding our way to get banks to comply with our Subject Access Requests and then how to go about reclaiming bank and credit card charges- no one on here knew what Statutory Demands were, never mind how to get them set aside.

 

I remember someone had a sig which said something like "Be careful of accepting legal advice from a complete stranger- verify everything by your own research before acting on it"

 

Yes this is true.

SDs were not so prolific as they appear to be now,while the main focus was on reclaiming bank charges,there were 2 mods on CAG who were briefed on SDs in RobertXT and Seminole-that was back in mid 2006.

 

As has also been pointed out,any advice and opinions expressed on CAG are soley those of the poster,and you should seek legal advice should you be unsure.

Generally,I personally have no reason to have any concerns about BR advice being offered on CAG,I think its fair to say that when you consider the size of the site,and the wealth of topics discussed daily,it wont always be possible to get things 100%,but theres usually someone who will come along who DOES know,and correct it,or else challenge it.

Additionally CAG has some members who work in the debt advisory and counselling fields,who contribute with some real authority.

 

That said,we can always do better-and dont rest on our laurels,and criticism is one way to alert us to things that need to be looked at.

I dont think the thread title here represents the whole picture,but the points have been noted.

[Ginas1401]

I'm really sorry, but I totally disagree with you naming solicitors on here. They cannot defend themselves at all, and you cold ruin their careers.

It's just wrong!

Edited September 9, 2009 by MARTIN3030
Quoted Identifiers removed.

[MARTIN3030]

I'm really sorry, but I totally disagree with you naming solicitors on here. They cannot defend themselves at all, and you cold ruin their careers.

It's just wrong!

 

 

 

Yes agree,there is no need to name individuals nor organisations,aside from the fact that it is a breach of site rules to post information that cannot be substantiated/could border on libel.

[42man]

I'm sorry to hear of this story, and can fully understand what you have been through as I have been through similar, although I had a good judge who quoted this piece of law on the day of my annullment hearing, he said he realised I had 'other' grounds but turned on the opposing solicitor to point out that there was no affadavit of continued service from earlier adjourned hearings and can the judge have the affadavit and proof of service....

 

Judge Boggis QC - RE AWAN - [2000] BPIR 241

 

'In my judgment, bankruptcy is one of the most serious forms of execution that can be brought against a debtor. In any bankruptcy proceedings it is, in my view, absolutely clear that the provisions as to service must be followed exactly. - JUDGE BOGGIS QC - SITTING AS A JUDGE OF THE HIGH COURT

 

Apart from my other arguments, It came up because there was no affadavit of continued service presented sealed to the court from earlier adjourned hearings (which I had NO knowledge of)

 

I had also filled in Witness statements to state that I had never seen a stat demand (the first I found out was when a big pack came from the Official Receiver)....

 

Subsequently the OR attended my annullment hearing to 'secure' their interests and to get their costs too - but they couldn't progress it further because at my interview with the OR, I presented them with my court annullment papers..

 

Did you ever check the process server had an OFT licence too ?

 

Have a read here - http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/198141-1st-credit-connaughts.html