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Shocked By Bankruptcy

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Heard this daft story from a lawyer today, describing what happened in bankruptcy court to an "acquaintance" of his.

The acquaintance is an FSA licensed financial adviser who specialises in challenging consumer credit agreements. He ran up a ton of unsecured debt for himself, and then failed to pay. There was a particular credit card debt - about £5k - that he intended to challenge on several grounds as to enforceability - the kind of stuff you find on MSE.

The lender served him with a statutory demand for the debt, which is the first step in bankruptcy proceedings. He goes to his solicitors, who enter negotiations with the lender but do nothing about the demand. Next step - a bankruptcy petition is served on foot of the demand and a date set for the court hearing. "Wha? I thought we were in negotiations!" He gets onto the lawyer (the guy who told me the story), and is told that it all depends on which judge he gets: he should have tried to set aside the statutory demand when he had the chance.

The case comes on. He goes into court quite confident with all his "not enforceable" arguments prepared, but comes up against a very polite but no-nonsense judge - within five minutes he is adjudicated bankrupt. Jaw hits floor. The lawyer tells me that judges usually dismiss petitions where there's an arguable case. But many judges mask their utter contempt for people who try to dodge their debts on technicalities, and this guy had the misfortune of having his case allocated to one of them.

He may well lose his licence from the FSA, so he's got to get the bankruptcy annulled. How does he do that? Pay the debt! But not just the £5k - all of his other defaulting debts have to be covered as well. The guy says he can pay, so why did he stop paying in the first place?

The lawyer didn't know the ultimate figure - he hadn't been officially instructed - but we were both pleased to see this cynical gamble backfire in a great belch of smoke.

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Heard this daft story from a lawyer today, describing what happened in bankruptcy court to an "acquaintance" of his.

The acquaintance is an FSA licensed financial adviser who specialises in challenging consumer credit agreements. He ran up a ton of unsecured debt for himself, and then failed to pay. There was a particular credit card debt - about £5k - that he intended to challenge on several grounds as to enforceability - the kind of stuff you find on MSE.

The lender served him with a statutory demand for the debt, which is the first step in bankruptcy proceedings. He goes to his solicitors, who enter negotiations with the lender but do nothing about the demand. Next step - a bankruptcy petition is served on foot of the demand and a date set for the court hearing. "Wha? I thought we were in negotiations!" He gets onto the lawyer (the guy who told me the story), and is told that it all depends on which judge he gets: he should have tried to set aside the statutory demand when he had the chance.

The case comes on. He goes into court quite confident with all his "not enforceable" arguments prepared, but comes up against a very polite but no-nonsense judge - within five minutes he is adjudicated bankrupt. Jaw hits floor. The lawyer tells me that judges usually dismiss petitions where there's an arguable case. But many judges mask their utter contempt for people who try to dodge their debts on technicalities, and this guy had the misfortune of having his case allocated to one of them.

He may well lose his licence from the FSA, so he's got to get the bankruptcy annulled. How does he do that? Pay the debt! But not just the £5k - all of his other defaulting debts have to be covered as well. The guy says he can pay, so why did he stop paying in the first place?

The lawyer didn't know the ultimate figure - he hadn't been officially instructed - but we were both pleased to see this cynical gamble backfire in a great belch of smoke.

A "heart warming" little story, okaycuckoo. Thanks for posting it. :)

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Heard this daft story from a lawyer today, describing what happened in bankruptcy court to an "acquaintance" of his.

The acquaintance is an FSA licensed financial adviser who specialises in challenging consumer credit agreements. He ran up a ton of unsecured debt for himself, and then failed to pay. There was a particular credit card debt - about £5k - that he intended to challenge on several grounds as to enforceability - the kind of stuff you find on MSE.

The lender served him with a statutory demand for the debt, which is the first step in bankruptcy proceedings. He goes to his solicitors, who enter negotiations with the lender but do nothing about the demand. Next step - a bankruptcy petition is served on foot of the demand and a date set for the court hearing. "Wha? I thought we were in negotiations!" He gets onto the lawyer (the guy who told me the story), and is told that it all depends on which judge he gets: he should have tried to set aside the statutory demand when he had the chance.

The case comes on. He goes into court quite confident with all his "not enforceable" arguments prepared, but comes up against a very polite but no-nonsense judge - within five minutes he is adjudicated bankrupt. Jaw hits floor. The lawyer tells me that judges usually dismiss petitions where there's an arguable case. But many judges mask their utter contempt for people who try to dodge their debts on technicalities, and this guy had the misfortune of having his case allocated to one of them.

He may well lose his licence from the FSA, so he's got to get the bankruptcy annulled. How does he do that? Pay the debt! But not just the £5k - all of his other defaulting debts have to be covered as well. The guy says he can pay, so why did he stop paying in the first place?

The lawyer didn't know the ultimate figure - he hadn't been officially instructed - but we were both pleased to see this cynical gamble backfire in a great belch of smoke.

Does this chap do pro bono work?

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Heard this daft story from a lawyer today, describing what happened in bankruptcy court to an "acquaintance" of his.

The acquaintance is an FSA licensed financial adviser who specialises in challenging consumer credit agreements. He ran up a ton of unsecured debt for himself, and then failed to pay. There was a particular credit card debt - about £5k - that he intended to challenge on several grounds as to enforceability - the kind of stuff you find on MSE.

The lender served him with a statutory demand for the debt, which is the first step in bankruptcy proceedings. He goes to his solicitors, who enter negotiations with the lender but do nothing about the demand. Next step - a bankruptcy petition is served on foot of the demand and a date set for the court hearing. "Wha? I thought we were in negotiations!" He gets onto the lawyer (the guy who told me the story), and is told that it all depends on which judge he gets: he should have tried to set aside the statutory demand when he had the chance.

The case comes on. He goes into court quite confident with all his "not enforceable" arguments prepared, but comes up against a very polite but no-nonsense judge - within five minutes he is adjudicated bankrupt. Jaw hits floor. The lawyer tells me that judges usually dismiss petitions where there's an arguable case. But many judges mask their utter contempt for people who try to dodge their debts on technicalities, and this guy had the misfortune of having his case allocated to one of them.

He may well lose his licence from the FSA, so he's got to get the bankruptcy annulled. How does he do that? Pay the debt! But not just the £5k - all of his other defaulting debts have to be covered as well. The guy says he can pay, so why did he stop paying in the first place?

The lawyer didn't know the ultimate figure - he hadn't been officially instructed - but we were both pleased to see this cynical gamble backfire in a great belch of smoke.

Hoisted by his own petard.

Some things make me wonder a bit about the validity of the story. Normally credit card companies dont go straight for bankruptcy. Most people who cant pay them have no assets, so the cost of making someone bankrupt usually outweights the benefits.

But if they have found out that this person has assets that they can go for, then they may well have indeed gone for this option. And as the person may well have been known to them with his debt repudiation efforts, then they may have had a double incentive to make an example of them

As for not paying when he could pay, that borders on the criminal. If he borrowed the money in the first place with no intention of paying it back, that would be a crime.

The bit I doubt most though, is about the honest no nonsense judge. Rare as hens teeth.

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Heard this daft story from a lawyer today, describing what happened in bankruptcy court to an "acquaintance" of his.

The acquaintance is an FSA licensed financial adviser who specialises in challenging consumer credit agreements. He ran up a ton of unsecured debt for himself, and then failed to pay. There was a particular credit card debt - about £5k - that he intended to challenge on several grounds as to enforceability - the kind of stuff you find on MSE.

The lender served him with a statutory demand for the debt, which is the first step in bankruptcy proceedings. He goes to his solicitors, who enter negotiations with the lender but do nothing about the demand. Next step - a bankruptcy petition is served on foot of the demand and a date set for the court hearing. "Wha? I thought we were in negotiations!" He gets onto the lawyer (the guy who told me the story), and is told that it all depends on which judge he gets: he should have tried to set aside the statutory demand when he had the chance.

The case comes on. He goes into court quite confident with all his "not enforceable" arguments prepared, but comes up against a very polite but no-nonsense judge - within five minutes he is adjudicated bankrupt. Jaw hits floor. The lawyer tells me that judges usually dismiss petitions where there's an arguable case. But many judges mask their utter contempt for people who try to dodge their debts on technicalities, and this guy had the misfortune of having his case allocated to one of them.

He may well lose his licence from the FSA, so he's got to get the bankruptcy annulled. How does he do that? Pay the debt! But not just the £5k - all of his other defaulting debts have to be covered as well. The guy says he can pay, so why did he stop paying in the first place?

The lawyer didn't know the ultimate figure - he hadn't been officially instructed - but we were both pleased to see this cynical gamble backfire in a great belch of smoke.

Serves him right, the tosser.

Just a shame the bank also got away with it though, isn't it?

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i used to 'run' one of these companies (unenforceable debts, not sh1t solicitors).

We took over half a million while i was there and its still going. Theyve not had a penny written off so far

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.....

He may well lose his licence from the FSA, ....

"may".... "may"...... Jeez its no wonder the UK is screwed is it? People like my dad would have looked up to people like this as respectable. (My dad lost all his money in the 70s inflation)

The financial service industry should be shut down with immediate effect. Where's Eric when you need him :D

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"may".... "may"...... Jeez its no wonder the UK is screwed is it? People like my dad would have looked up to people like this as respectable. (My dad lost all his money in the 70s inflation)

The financial service industry should be shut down with immediate effect. Where's Eric when you need him biggrin.gif

the FSAs I have met socially are not people whose personal financial approach I admire. I certainly would never take their advice

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The bit I doubt most though, is about the honest no nonsense judge. Rare as hens teeth.

Credit card companies usually go for judgment, rather than bankruptcy - but bankruptcy is alot quicker if you want to force the isse.

You've probably overdosed on cynicism (although I guess you have your own experiences). Most judges are good, seen it all before, and can spot ******** from a mile. This case would usually be kicked to touch because even bullshitters must have their say.

Big problem, I reckon, is that alot of this stuff is dealt with beyond public scrutiny. Same in the family courts. Two big issues of our time - unpayable debt and family breakdown - and the public really has no way of knowing how justice is done in these cases because they're dealt with in judges chambers without practical access for the media or anyone else. The attitude is, "Trust us, we know what we're doing". Not good enough.

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i used to 'run' one of these companies (unenforceable debts, not sh1t solicitors).

We took over half a million while i was there and its still going. Theyve not had a penny written off so far

Cartel? Huge complaints about that company, but they seem to have shut down alot of the internet criticism.

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Heard this daft story from a lawyer today, describing what happened in bankruptcy court to an "acquaintance" of his.

The acquaintance is an FSA licensed financial adviser who specialises in challenging consumer credit agreements. He ran up a ton of unsecured debt for himself, and then failed to pay. There was a particular credit card debt - about £5k - that he intended to challenge on several grounds as to enforceability - the kind of stuff you find on MSE.

The lender served him with a statutory demand for the debt, which is the first step in bankruptcy proceedings. He goes to his solicitors, who enter negotiations with the lender but do nothing about the demand. Next step - a bankruptcy petition is served on foot of the demand and a date set for the court hearing. "Wha? I thought we were in negotiations!" He gets onto the lawyer (the guy who told me the story), and is told that it all depends on which judge he gets: he should have tried to set aside the statutory demand when he had the chance.

The case comes on. He goes into court quite confident with all his "not enforceable" arguments prepared, but comes up against a very polite but no-nonsense judge - within five minutes he is adjudicated bankrupt. Jaw hits floor. The lawyer tells me that judges usually dismiss petitions where there's an arguable case. But many judges mask their utter contempt for people who try to dodge their debts on technicalities, and this guy had the misfortune of having his case allocated to one of them.

He may well lose his licence from the FSA, so he's got to get the bankruptcy annulled. How does he do that? Pay the debt! But not just the £5k - all of his other defaulting debts have to be covered as well. The guy says he can pay, so why did he stop paying in the first place?

The lawyer didn't know the ultimate figure - he hadn't been officially instructed - but we were both pleased to see this cynical gamble backfire in a great belch of smoke.

If he's going to challenge things on procedure, he should know what the procedure is. He should have got the statutory demand set aside. It isn't that difficult to do and he would have suceeded.

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Cartel? Huge complaints about that company, but they seem to have shut down alot of the internet criticism.

No, they were the biggest and ive met the owners but not me.

Also see - ratio money, credit issues, clear your debt etc etc.

All much bigger than mine and all gone now.

One thing that really isnt given enough credence on this site is the staggering amount of debt that has been written off by the banks without even looking into unenforceability

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If he's going to challenge things on procedure, he should know what the procedure is. He should have got the statutory demand set aside. It isn't that difficult to do and he would have suceeded.

Yes, the statutory demand would have almost certainly been set aside if debt not complying with consumer credit legislation.

-----------------------

As far as I'm aware (although my brush with the bankruptcy courts was in the nineties recession) provided the debt on the statutory demand and costs were paid the bankruptcy would be annulled unless there's other legal agreements with clauses about insolvency declarations that the other parties wished to enforce. Also if there was enough cash in bank accounts to pay off creditors and the receiver's costs, the receiver would just do this and it would be an expensive lesson.

As far as judges go, my experience is they do generally take sides and are flexible with the law if they feel sorry for one party etc. if they can be. However, almost all are easily lead by solicitors who confidently state the law but, do not place any weight on a layperson putting the case, even if it's legally correct (judges just don't know the law and rely on counsel knowing their stuff).

See the speeding cases defended by Nick Freeman/Mr Loophole. You could find all the same loopholes yourself but, it's very unlikely the judge will take a blind bit of notice because you're not a qualified solicitor.

What the legal system in this country is very bad for is once the wheels have set into motion and judgements issued they are very difficult to overturn. We frequently have problems with scam firms, or just incompetent firms sending invoices and county court claims to individual branches. where they get left undealt with. Once a judgement, even though it's a default judgement, is issued.

It's a nightmare to unravel and we can end up paying money to some scam advertising firm, for adverts they've never placed, just to get rid of a default CCJ they've managed to questionably obtain.

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No, they were the biggest and ive met the owners but not me.

Also see - ratio money, credit issues, clear your debt etc etc.

All much bigger than mine and all gone now.

One thing that really isnt given enough credence on this site is the staggering amount of debt that has been written off by the banks without even looking into unenforceability

The commercial court judgments that came out around new years - most important are Carey and McGuffick - effectively torpedoed that business. Links:

http://www.bailii.org/ew/cases/EWHC/QB/2009/3417.html

http://www.bailii.org/ew/cases/EWHC/Comm/2009/2386.html

The write-offs go mostly unnoticed, but I see them all the time - we have a massive, accelerating debt destruction. Can it be balanced out? No idea. Honest reporting by government would help. Pfffff!

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Yes, the statutory demand would have almost certainly been set aside if debt not complying with consumer credit legislation.

-----------------------

As far as I'm aware (although my brush with the bankruptcy courts was in the nineties recession) provided the debt on the statutory demand and costs were paid the bankruptcy would be annulled unless there's other legal agreements with clauses about insolvency declarations that the other parties wished to enforce. Also if there was enough cash in bank accounts to pay off creditors and the receiver's costs, the receiver would just do this and it would be an expensive lesson.

As far as judges go, my experience is they do generally take sides and are flexible with the law if they feel sorry for one party etc. if they can be. However, almost all are easily lead by solicitors who confidently state the law but, do not place any weight on a layperson putting the case, even if it's legally correct (judges just don't know the law and rely on counsel knowing their stuff).

See the speeding cases defended by Nick Freeman/Mr Loophole. You could find all the same loopholes yourself but, it's very unlikely the judge will take a blind bit of notice because you're not a qualified solicitor.

What the legal system in this country is very bad for is once the wheels have set into motion and judgements issued they are very difficult to overturn. We frequently have problems with scam firms, or just incompetent firms sending invoices and county court claims to individual branches. where they get left undealt with. Once a judgement, even though it's a default judgement, is issued.

It's a nightmare to unravel and we can end up paying money to some scam advertising firm, for adverts they've never placed, just to get rid of a default CCJ they've managed to questionably obtain.

The statutory demand would be set aside because there was a dispute about whether or not the loan complies with consumer credit legislation regardless of the merits of the dispute. The bank could then get a ccj against him and if he didn't pay up, then they could get a bankruptcy petition based on the unpaid court judgement.

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Hoisted by his own petard.

Some things make me wonder a bit about the validity of the story. Normally credit card companies dont go straight for bankruptcy. Most people who cant pay them have no assets, so the cost of making someone bankrupt usually outweights the benefits.

Normally? This wasn't a 'normal' case, and they probably knew it.

The bit I doubt most though, is about the honest no nonsense judge. Rare as hens teeth.

The fact that a judge makes a no-nonsense decision in this case says nothing about what he'd do in another, especially if his friends and/or pet causes happen to be involved.

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The statutory demand would be set aside because there was a dispute about whether or not the loan complies with consumer credit legislation regardless of the merits of the dispute. The bank could then get a ccj against him and if he didn't pay up, then they could get a bankruptcy petition based on the unpaid court judgement.

And anyone who was legally experienced would drag that on for ages and ratchet up costs for the bank, which they're unlikely to be awarded, by having the hearing moved to a local court etc.

I reckon you could make most large corporates throw in the towel on debts under £5k by frustrating their attempts at recovery through insolvency procedures whilst they watch their legal bills mount.. Drag it on for more than two years and anything moved into the wife's name would be out of reach of the receiver if they did inevitably manage it..

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And anyone who was legally experienced would drag that on for ages and ratchet up costs for the bank, which they're unlikely to be awarded, by having the hearing moved to a local court etc.

I reckon you could make most large corporates throw in the towel on debts under £5k by frustrating their attempts at recovery through insolvency procedures whilst they watch their legal bills mount.. Drag it on for more than two years and anything moved into the wife's name would be out of reach of the receiver if they did inevitably manage it..

But would the wife then be out of your reach? Hehe.

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Bankruptcy is easy.

I forget the limit, but if you are in debt to a creditor for £800 or so ( may be slightly different) they ( or YOU) can petition that the Official Reciever is asked to settle things.

Thats all a Bankruptcy is.

You dont need CCJs, statutory Demands, just an unpaid debt.

It costs though.

And in this case, the judge was just asked...are these debts due, and can the debtor pay them? He will have asked the Debtor.

THIS debtor would have started his spiel....the judge would have listened for a bit and probably asked...."Did you borrow this money?"

The man would have said yes or no.

If yes, the next question would have been..."can you pay it back?"

Its hard to see the argument once its at Bankruptcy hearing.

Still, lets look on the Bright side, the guy REALLY Doesnt owe ANY of this money now...so job done.

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