Bankruptcy Disputes (application for annulment; application for rescission)

When money is tight and friends are view, turn to Oxley & Coward!

Bankruptcy does not have the same stigma it once did, but before you make the decision to make someone bankrupt, including yourself, you should consider your position fully. It can have a significant impact on your assets, but may also affect your job. Think twice before you decide it is the best thing to do.

Debt Recovery tool

As a result of the serious consequences of bankruptcy, despite the reduced stigma it carries, bankruptcy proceedings are still used as a very persuasive tool to recover unpaid debts. The debt has to be liquidated, undisputed and unsecured. In addition, the debtor must have no reasonable prospect of being able to pay the debt, otherwise any application for bankruptcy may be challenged.

Our team of advisors can guide you through the issues to consider, and whether or not it is appropriate for the threat of bankruptcy (by serving a statutory demand) or the issuing of a bankruptcy petition, to be used as a quick and forceful method of debt collection. Take head however, don’t take the action lightly and seek advice beforehand. If the process is started incorrectly or unnecessarily, you may become liable for the debtor’s costs for defending the same. In addition, bankruptcy may not be appropriate if the debtor is impecunious, as it may simply leave you in the long line of many unsecured creditors, but having spent significant costs to get there.

Bankruptcy may also be considered if it is thought a debtor may be hiding assets to avoid judgment and enforcement, due to the Official Receiver/Trustee in Bankruptcy’s extensive powers to investigate the debtor’s accounts, with criminal sanctions being imposed for wrongdoing.

Statutory Demand

As set out above, before issuing a bankruptcy petition at court, the creditor must prove to the court that the debtor is unable to pay their debts. This can be achieved by serving a Statutory Demand on the debtor personally, provided that the debt is at least £5,000. Once a Statutory Demand is served, the debtor has 18 clear days to apply to the court to have the Statutory Demand set aside, or 21 clear days from the date of service to comply with the demand and pay the debt. Service of a statutory demand is often all that is required to secure a response from the debtor.

Disputing the Demand

If the debt is not paid following the issue of a Statutory Demand, the creditor may proceed to issue the bankruptcy petition. Our team would point out that if a debtor only raises a valid dispute to the debt following the petition being issued, the debtor is likely to be ordered to pay the creditor’s costs due to the failure to respond to the Statutory Demand.

If however, a valid dispute is raised to the demand, it should be withdrawn by the creditor and a standard debt action commenced in the County Court. An application to the court can be made to set aside the demand if it is not withdrawn by the creditor.

Our Dispute Resolution team would stress that setting aside of the statutory demand would usually result in the creditor being ordered to pay the debtor’s costs.

Disputing the Bankruptcy Petition

Once a bankruptcy petition has been issued, the court will list the petition for a hearing on the first available date after 14 days and the petition cannot be withdrawn without the court’s permission.

Should a debtor wish to oppose the petition, they must act quickly and our team would strongly advise that legal assistance is sort immediately without delay, as the debtor must file their grounds for objection 7 days before the listed hearing.

The debtor may wish to dispute the petition for various reasons. A bankruptcy order would not be made where the debtor has made an offer to secure or compound the debt, which if accepted would have required the dismissal of the petition, but the offer was unreasonably refused.

Annulment

Do you want to find a way to cancel a Bankruptcy Order made against you and revers its effects? If so, our Dispute Resolution team could help. You should take action and consider seeking legal advice immediately, before it is too late.

By acting quickly, with our professional assistance you may be able to apply to court for an order to have your bankruptcy annulled. Annulment would mean:

• You revert to your pre-bankruptcy status
• You would avoid having your home repossessed and avoid losing other personal assets such as your car
• The bankruptcy order would be completely removed from your credit file

So why would a court allow you to annul a bankruptcy order? Amongst the common reasons are:

• At the time the bankruptcy order was made, there was a valid reason why it ought not to have been made (for example, the proper procedures were not followed to obtain the order, or the debt had been paid prior to the hearing at which the bankruptcy order was made);
• the debts and expenses of the bankruptcy have either been paid in full or secured to the satisfaction of the court
• an individual voluntary arrangement (IVA) has been entered into and approved.

If you want more advice on how to deal with any disputes concerning bankruptcy proceedings, act quickly. Do not delay, contact our dedicated team today!