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David.29
Starting Member
1 Posts |
 Posted - 30 December 2010 : 11:19:47
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My father-in-law is planning to go bankrupt in the new year but I'm worried as his wife has spent a fortune (on credit, catalogs, etc) during Christmas buying very expensive gifts knowing that they had no intention of ever paying for them. They have also maxed out their credit cards, overdrafts, etc, even though they knew that they couldn't pay back the money.
Also, they have really expensive items in their home which they believe can't be touched by the receivers(artwork worth £1000's, a bronze statue they've just bought for £2000, a 50 inch plasma tv, etc.
They also own property abroad which I believe they are planning on trying to hide from the receivers. I have tried to make them see sense but to no avail.
My father in law has recently left the forces, is living in housing association property and is on a disability pension and has mental health issues. I know that he is not keen on going bankrupt but is being coerced into it by his wife.
To be honest they are adults and should know better. With pension gratuities, compensation and insurance payments they have had in excess of £500,000 over the last 3 years but live like rock stars, staying in expensive hotels, drinking expensive champagnes, etc.
My main worry is that my 5 year old son spends a lot of time at their house and has his own room there with his computer, etc, in it. Would his items be liable for seizure?
I believe that their debts are in excess of £30,000 but I have tried to advise that they should sell their overseas properties (they paid £80,000 for them 2 years ago cash) and sort their finances from the money. I know that they are trying to sell the properties at the moment but they have had no interest despite dropping the asking price to £40,000.
I'm really just after any advice that I could pass on to my in-laws as I believe that they are heading for real trouble. |
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gettingoutofdebt
forum expert
2418 Posts |
Posted - 30 December 2010 : 11:45:23
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ORs are very experienced at researching people's past finances and it is highly unlikely that the property abroad will escape the notice of the OR. It is likely it will be sold and the proceeds will go towards the creditors.
With your father-in-law having taken credit with the knowledge that they cannot pay it back it is likely that they will get a BRU (Bankruptcy Undertaking). The BRU is used to increase the length of bankruptcy from the normal 1 year up to 15 years and this isn't something to be taken lightly.
It is also highly recommended to be 100% honest with the OR regarding the artwork, plasma TV, etc. and if these items are worth more than £1k they will definitely be taken.
The OR will look at the information provided by people declaring BR on the forms and then delve into their financial background. If the forms and the CC/bank/loan statements do not match then the OR will go back further.
For your father-in-law there are three possibilities:
1. He is completely honest regarding the purchases and property abroad. He will likely lose all of them but will only be BR for 1 year and then can get on with his life.
2. He is semi-honest and declares the recent purchases but not the property. The OR delves into his past financial history, finds the property abroad and he receives a BRU for x years.
3. He is dishonest and doesn't declare the recent purchases or the property abroad. The OR deems this as fraud and he faces the prospect of prison time.
From what you have said regarding the amount of money they have had and that they have taken credit with no intention of paying it back a BRU is likely in any case but if he is 100% honest with the OR then there is a chance he may escape
a BRU.
Do not worry about your son and his PC. The OR is only interested in items that can be resold for a good value and PCs devalue very quickly. |
Edited by - gettingoutofdebt on 30 December 2010 11:46:20 |
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Viki.W
forum expert
United Kingdom
2211 Posts |
Posted - 30 December 2010 : 11:56:24
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Hi David,
Great advice from gettingoutofdebt.
Bankruptcy may not be the best option for your father-in-law, as if he sells the property, some of the expensive items etc and tries to budget, he may be able to repay the debt on his own terms. That way, he doesn't have the court involved.
Maybe you could sit down with him and go through all of his assets etc and then urge him to take advice.
Viki Warbrooke
Vincent Bond & Co
If you would like free advice on all options available and help with your bankruptcy petition please contact me at http://www.vincentbond.com/about_us_Viki_Warbrooke.asp
Please read my experience of debt via my blog at http://vikiw.blogs.iva.co.uk/ |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 31 December 2010 : 00:23:59
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Hi David,
some sound observations from gettingoutofdebt.
As a former examiner, mine would be:
1. Are the credit accounts(i.e overdrafts, loans,credit cards etc) in just your father in laws name, or are they jointly held, and over what period have they been max'd out(I'm guessing just recently)
2. Are any of the accounts in arrears, or indeed have any of the creditors began enforcement action, default notices issued etc?
As Viki noted, bankruptcy may not be the best option for your Father in law, as it appears the overseas properties could be realised to avoid this, or possibly another option that other experts may be able to identify.
From, your post though, it appears that your father in laws wife is the driving force behind this, thinking that, having gone on a spending binge, using her husbands credit facilities with no intention or expectation of paying them back, that this can be taken care of, by him declaring himself bankrupt.
However, the problem is that if none of the lenders are taking enforcement action, then they would bring any unusual spending patterns to the attention of the OR, who could either ask your father in law to provide statements for all accounts, or if for some reason they aren't available, the OR will most definitely request copy statements from the lenders, which will reveal these excessive spending patterns, resulting in him being asked to explain the reason why.
This in turn will result in all your father in laws finances being investigated further, which will in time reveal where and how all his resettlement and pension gratuities, insurance payouts etc have been disbursed, and no matter how much he may try to conceal the properties abroad, this fact will at some time come to light, leading to further complications.
So, if your father in law is intent on going down the bankruptcy route, then he should think very carefully how truthfully he fills in the statement of affairs, as completing it knowing the information to be false or misleading, is an offence under the Perjury act 1911,whichg then becomes a criminal offence.
But as previously stated, bankruptcy here doesn't appear to be the best option. The other point I would make, based on your post, is that you mention mental health issues. Before the OR would seek to obtain a BRU/BRO, they have to consider whether it would be in the public interest, and one matter that would score against seeking a BRU/O are mental health issues. This dooes't mean that they wouldn't seek one, they would have to establish what impact the mental health issues have had on the individual, in their subsequent misconduct, and indeed whether it would be in the public interest to proceed
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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My father-in-law is planning to go bankrupt
