lending money to a bankrupt

[Amethyst]

If you lend money to someone who did not disclose they were undischarged bankrupt are there any issues to be aware of if suing them for repayment ? (while still undischarged - ie broken terms of agreement and refusing to repay)

[LEXUSLAWYER]

Re: lending money to a bankrupt

If you lend money to someone who did not disclose they were undischarged bankrupt are there any issues to be aware of if suing them for repayment ? (while still undischarged - ie broken terms of agreement and refusing to repay)

Not sure that you can actually sue for repayment in the normal sense...ie by entering a Court claim. As it constitutes a "Bankruptcy Offence" I believe your action has to be taken with the permission of the Official Receiver or an Insolvency Practitioner...whichever is acting as their trustee in Bankruptcy or indeed, by the Trustee themselves.

As part of such a recovery action will necessarily be an official report to Court that the offence has been committed and seeking a judgement and directions to deal with it. I haven't looked it up but I believe it can carry as a maximum a fine and/or prison sentence or both plus the Court's sanction for future discharge from the Bankruptcy order. Because de facto this is a criminal offence and so all you may be able to recover are most probably some pretty mediocre damages...which most likely will be nothing even close to what you have actually been taken for. I am sure an Insolvency Solicitor can fill in the gaps for you, for the cost of a telephone call or an email!

Kind regards
LL


?

[FlamingParrot]

Re: lending money to a bankrupt

As part of such a recovery action will necessarily be an official report to Court that the offence has been committed and seeking a judgement and directions to deal with it. I haven't looked it up but I believe it can carry as a maximum a fine and/or prison sentence or both plus the Court's sanction for future discharge from the Bankruptcy order. Because de facto this is a criminal offence and so all you may be able to recover are most probably some pretty mediocre damages...which most likely will be nothing even close to what you have actually been taken for.

An undischarged bankrupt must disclose their status if applying for credit over £500. Failing to do so can result in a Bankruptcy Restrictions Order (BRO) being made after the OR reports the fact to the court. If the bankrupt contravenes the terms of the BRO, then they could face criminal action.

What sort of behaviour could lead the official receiver to apply for a BRO against me?

When deciding whether to make a BRO, the court may take into account your behaviour before and after the date of the bankruptcy order, so the official receiver will be looking closely at all your conduct.

We cannot list all the actions that could be considered dishonest or blameworthy in relation to your affairs, but here are some examples the official receiver could include in his report to court:

• incurring debts that you knew you had no reasonable chance of repaying

What is a Bankruptcy Restrictions Order

If the official receiver considers that the conduct of a bankrupt has been dishonest or blameworthy in some other way, he (or she) will report the facts to court and ask for a BRO to be made. The court will consider this report and any other evidence put before it, and decide whether it should make a BRO. If it does, you will be subject to certain restrictions for the period stated in the order. This can be from 2 to 15 years.
What are the restrictions
They include the restrictions set out in insolvency law which you are subject to when you are made bankrupt and which are normally lifted when you are discharged from bankruptcy. These restrictions include the following:

• You must disclose your status to a credit provider if you wish to get credit of more than £500.

What happens if I am subject to a BRO and contravene the restrictions?

You may be prosecuted and, if found guilty, get a criminal penalty such as a fine or imprisonment.

I am sure an Insolvency Solicitor can fill in the gaps for you, for the cost of a telephone call or an email!

...or you may want to contact the Insolvency Service: insolvency.enquiryline@insolvency.gsi.gov.uk