can Trustee Sols reclaiim money paid to me 6mts before client declared BK?

[Johnnyc]

I don't know how I can answer the questions other than I have - he did not know the extent of the debt when he paid me because although the house had been repossessed it had not been sold so the debt was unknown. After the house was sold the secured debts came to around £70,000 and unsecured around £30,000. He was paying around £600 per month towards his debts before deciding to go bankrupt. This was after he had paid me the £20,000.

 

Our relationship was at breaking point when he paid me the money and I pressurised him into giving me the money - he was expecting significantly more than he received and he only decided to go bankrupt after receiving advice from solicitors. This was a few months after paying me and after he had a nervous breakdown.

 

It is my belief that this pursuit of my money is driven by the solicitors working for the OR because I have been informed that very little of my £20K will go to the secured creditors after the costs of the solicitors have been deducted. It is a disgrace that they can try and take my hard earned money for their own gratification and there should clearly be a point at which this stops - the secured creditors being Halifax and Northern Rock have clearly made mistakes which both they and the solicitors are trying to rectify by taking my money. I do appreciate your help with this but as you can see it is just wrong in my opinion.

[biggeorge]

This is absolutely crazy and although I can't help with any advice I would if it was me personally be ensuring MY funds we safe and sound no matter what any court or OR is saying.

To me this would be simple: I made a loan and it was paid back as agreed before BR was even thought about.

The old saying of money under the mattress comes to mind, Can't get what you don't have.

 

George

[debtinfo]

ok so forget about the secured debts for a minute as that was unknown at the time. Lets look at the unsecured debts for now. it seems that he owed you at least £20K (probably more) and he also owed other unsecured creditors at least £20k at the point he got the redundancy money.

 

One of the questions the court will look at is was he insolvent at the time. You keep saying that he had not thought about bankruptcy yet. That does not matter for the first test. The test is, was he insolvent. Now there are 2 definitions for insolvency. the first is this. Were his assets less than his debts.Now unless his house was sold for more than £110,000 (the £70,000 shortfall plus £20k to you plus £20k other unsecured creditors) less than the market value then this measure would seem to point to insolvency. That may be something you want to check out. what was the expected market value of the property and what did it sell for.

 

The second definition is can he pay his debts as they fall due. Now normally this means the normal monthly payments to his creditors. But when you miss payments and default the whole of those debts become due immediately so at that stage he would almost certainly be insolvent on that count. That is why it is important to know if he was up to date with his payments to creditors at the point he paid you.

 

If you want to checkout the law look up the insolvency act 1986 and look at section 340, that is what covers preferences.

 

Finally forget about who is going to what if the money is recovered. it is either a preference or not and that is determined by the facts of the case and if it is a preference then the trustee is entitled to recover those monies.

[Johnnyc]

So what you are saying in effect is that I have no defence against something which is simply wrong - the OR wants to take my money to pay his own fees - is there any defence against this claim? I almost stopped speaking to my brother unless he repaid the money I had loaned him and the resultant arguments contributed to his nervous breakdown.

 

 

The law is obviously wrong if you cannot help your family without the greedy establishment trying to steal your money - I don't even have this much money now anyway so what can they do to get it back?

[debtinfo]

If you dont accept the very basic principle of the law, which is that an insolvent person should not give a preference to one of his creditors over the others, then it is going to be difficult to offer any answer that will satisfy you.

 

As i was trying to get at the easiest defense would to prove that he was not insolvent at the time. i dont know all of his circumstances so it is impossible for me to know if this defense is available to him. ut that is the first thing to try and establish the facts on.

[Johnnyc]

Hi

 

 

Thanks for the reply - my brother did not know the extent of his debts so he could not possibly know that he was insolvent at that particular time - however the solicitors working for the OR have dismissed that defence and argued that he was insolvent and he should have known that. I fail to see how this is a relevant argument if he had no idea whether the house had been sold and for how much. The way they have approached this is to just dismiss any counter argument and relentlessly insist he knew that he was insolvent so they want all my money back. If he can prove he had no idea how much he owed surely that is relevant? If not what other defences are available to me? I simply do not have that sort of money now - I only have my house which I fear they may force me to sell

[debtinfo]

Unfortunately they are correct, the law does does not depend on whether he knew he was insolvent or not. Just whether he was actually insolvent or not which is is tested by the 2 tests i mentioned above. lets assume that he was insolvent as you seem to be admitting that with what you have said so far.

 

There is another defense but it is much more difficult to prove as it is a matter or opinion rather than fact like the defense above. The second defense is whether or not he had a desire to put you in a better position than if he had not made the payment to you. As you are an associate of his in law it is presumed he did have a desire to put you in a better position unless you can prove otherwise. This is difficult and the question must be asked,when he had the money from his redundancy why did he pay it to you rather than splitting it between all of his creditors including you

[Johnnyc]

Thanks for your help so far - I can assure you he didn't have a choice about paying me back. It wasn't to put me in a better position because he had no intention of going bankrupt when he paid me some of my money - I pressured him into paying me back simply because I needed my money back at that time and our relationship was almost at breaking point. When he received the money from his redundancy he could not have split the money and paid all his creditors because he had no idea how much was owed at that time.

He only decided to go bankrupt after learning of the shortfall on the mortgage and secured loan. He realised at that point that he had no option but to go bankrupt and the subsequent pressure caused him to have a breakdown.

I do appreciate your help bit it still seems to me that the solicitors involved in this seem to be just trying to bully me into giving them money for their fees - (the Halifax and NR will not see any of that money after fees). I gave my brother some help and still haven't been paid all he owes me and it is quite clearly wrong that I am being hounded by the OR.

[debtinfo]

you keep saying but he did not intend to go bankrupt, that does not matter. what matters is that he was insolvent and he paid one creditor some money and not the others. Also forget about the secured creditors as they were not known at the time. You said he had unsecured creditors of 20K. So for definite he owed you and he owed 20K to other creditors at least. He got the redundancy money and paid you and not them. Now the judge is going to ask him, why did he do that, how is that not intending to to put you in a better position than them. That is what he needs to answer if he wants to rely on that defense.

 

Ill try and give an example of how that defense could be used. Say he owed you and some unsecured creditors, you have no arrangement to pay you back in installments just when he has the money. For his other creditors he does have monthly payments which he is up to date with. Now he comes into some money and pays you back in full but crucially he is still keeping up all his payments to his creditors on time. Later on he loses his job and goes bankrupt. Now in that situation you got all your money back and they didnt but crucially at the point he paid you he was paying them everything he was obliged to (up to gate with monthly payments) he had spare money and paid you so he was not intending to put you in a better position as he was happily paying them and would have done so if things had not changed.

 

Thats just one example but you can see how it differs from your situation where he was presumably not up to date with his other creditors so in that case the judge thinks why did he pay you and not them

[Johnnyc]

Hi, thanks very much for the further information. He was not paying any regular money to the other creditors at the time he paid me my money back.

 

 

I have just received a letter from the court asking for any witness statements - a one page blank sheet of paper. I am just going to tell the court that he did not know and still doesn't know what his debts were at that time. He wanted to use his money at that time to start up his won business but I gave him no choice other than to pay me back. I needed that money back and put severe pressure on him to give me my money back as soon as he got his redundancy. I do not have £20k in cash anymore so I can not pay them this money anyway. My only fear is that they will try and take my house off me - can they do this?

[debtinfo]

well assuming that the judge rules against you then all that does is show that there is a debt. The solicitors can then use any of the usual debt collection techniques from simply coming to an arrangement to pay in installments which should be the first thing they offer up to and including charging orders, repossession and bankruptcy itself. but as stated like with any debt they should allow a reasonable repayment plan in the first instance.

[Johnnyc]

The whole system is quite clearly crooked and is designed to help business/banks. It seems that you cannot try and help your family without the blood sucking establishment (bankers. solicitors, so called law) trying to rob me of my hard earned cash over the years. If I was not just another average "joe" then I'm sure this would not be being pursued with the zeal that these solicitors have embarked upon - I would rather give away all my money then let these blood sucking leeches get their hands on it. They have pusued my brother to the point of breakdown and almost suicide and still want their pound of flesh. It snot as if the Halifax and NR are going to see a penny of this money - that will all go the solicitors chasing this money which is clearly not their's or the stupid banks who were bailed out by the taxpayers when they got into trouble. The LAW is clearly an ASS in this case and I would rather fight this to the very end.