Scottish and English debt laws are different, so if you are a Scottish resident and have questions on debt, then this is the place to post.

Moderators: TalbotWoods, JaneClack

By MadMac
#203323 Have a situation here in Scotland which I hope someone can advise on.

A relative has apparently been declared bankrupt due to non-payment of "Factoring Fees" to a local authority (she owns a flat in a block which has a mix of council tenants and owners). Current debt in respect of this is around 10K. She is working and has equity in the property. Here's what she told me:

"The trustee person is Xxxxx Xxxx who works for X Xxxxxxx SIP

She has taken details of my earnings, assets etc. The car will likely remain with me because of it's low value.

I had to also detail all of my unsecured debts, including the factors fees they took action for, a total of about 15k. There was a total of about £2500 in the accounts they put a freeze on so that money goes to them.

The options she gave me were as follows

They take the flat from me and sell it to release the equity. Any difference is returned to me.
Someone I know can purchase the flat to release the equity and if they choose they can sell it back to me at such time as I can obtain a mortgage.
A 3rd party pays what is owed, because the fees for her services are constantly added she could give me a rough guide of around 13k if it was dealt with within a month, this would increase as time went on.

She was like a magpie....I was going through my car paperwork for the registration document for the (current car), she saw what was left of the document for the old (car scrapped a couple of years back) and pretty much accused me of still having it and not saying so. I had to explain to her that the section the scrappy sends away had been removed because she thought I was supposed to give them all of the document (what, so someone can commit ID fraud?) but she didn't seem convinced that I don't have it any more. I have a letter somewhere from DVLA about the (scrapped car) being scrapped so if it comes up again I'll look it out for her. Why would I have taken that document with me if I was trying to hide another car! An old banger of a car!"

I'm assuming SIP is an insolvency practitioner.

Can anything be done at this stage to rescue the situation? She's planning to scan relevant paperwork ASAP. Let me know if more detail is needed.
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By TalbotWoods
#203345 Assuming this is a forced bankruptcy the simplest answer is no.

She has been forced into this for non complinace over time, with various reminders and threats being issued, so unfortunalty she may be in for a slightly rougher time then had she done the deed herself.

She has declared debts of £10K (and possibly some yet to come to the surface) so lets say £15K of debts.

She has equity in the property, which will need to be released, so:

:arrow: If they sell it it will go for rock bottom price (normally at an auction)

:arrow: If someone buys the benefical interest in the flat, that will raise some towards the debt.

Now here is the sting, if she is looking at annulment of the bankrupcy, and there are debts of £10 ONLY, then it will cost more than £13K.

And these must be added onto the cost of the bankrurtcy:

Insolvency Fees
IPS feed
Govenrment fees

and this can add upto 100% additional cost.

What I would suggest she does is seek legal advice ASAP, as this is a forced bankruptcy, she will NEED specialist advice, which is beyond the remit of this forum!!

By MadMac
#203348 Thanks for the response. I 'm not familiar with the circumstances of how this all came about, but I understand she is seeking, as you put it, specialist advice.
By jade
#203408 Do you know how much equity is in the property?

If there was - say - £30k equity your relative - if she could raise the funds- could speak to a solicitor regarding a Recall of Sequestration - it basicaly means she would pay the IP enought funds to pay the debts in full + srtatutory interest and the IPS fees and costs. If she is able to do this the court can recall the bankruptcy as if it never happened at all.

Has this been explained to them?

There may not be a need to sell the property at all- I would advise getting further advise form an insolvency practitioner at this stage and not agreeing to anything regarding the sale of teh flat until she has spoken to someone else. she does however need to do so sooner rather than later as the fee lock is now ticking as far as the IP is concerned
By MadMac
#203449 Jade, thanks for your response on this.

I was of the impression that the woman she had spoken with actually was an IP - I'll try to get some more info re this over the weekend.