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Personal Insolvency - Coggle Diagram

- - - - At the end of the IVA, if debtor's
        payments into the IVA have not
        been sufficient to pay off debts
        in full, shortfall will usually be
        written off by the creditors
- - - - Petition can be made by either
        a creditor or debtor
        
        Creditors' petition
        Ground is that the debtor is unable/has
        no reasonable prospect to pay its petition
        debts
        Debt must be for a liquidated sum
        exceeding £5,000 unsecured and debtor
        must be domiciled in the UK
        
        Debtors' petition
        Ground is that debtor is unable to pay debts
        Must be accompanied by a statement of affairs
        setting out the debtor assets and liabilities
  - - - If court is satisfied that the grounds for a petition
        and these other requirements have been met,
        court has discretion to make a bankruptcy order.
        Upon doing this, either a trustee in bankruptcy is
        appointed or the court will pass the file to the
        Official Received (a govt body who will become
        the trustee until an alternative (if any) is appointed
        by creditors. If there are insufficient assets, may be
        difficult to persuade anyone other than this to
        become trustee).
        
        Bankrupt's estate vests in the trustee immediately upon their appointment taking effect, means that bankrupt will
        have to pass their assets to the trustee
        
        On the making of a bankruptcy order, the bankrupt is prohibited from doing a number of things including: acting as a director or being involved in the management of a company, obtaining credit of over £500 without disclosing the bankruptcy, giving gifts and practising in certain professions.
        Also deprived of ownership of their property except for their reasonable domestic needs
    - - Preferential creditors
        Similar to those on corporate winding up
      - Ordinary unsecured creditors
      - Specially preferred creditors
        Training/apprenticeship fees
      - Statutory interest
      - Expenses of the bankruptcy
      - Debts of a spouse
        Must be provable but they are postponed to other creditors
      - Secured creditors
        Limited to the value of the security itself and ranking with ordinary unsecured creditors for any excess amount owing
      - Any surplus is payable to the bankrupt
  - - - Preferences
        
        Can bring a claim for this if the transaction if:
        
        that person is a creditor (or a surety or guarantor of their debts or liabilities) and
        
        the individual does anything or suffers anything to be done which has the effect of putting that person in a better position than they otherwise would've been in the event of the individual being made bankrupt
        
        Transaction must take place within 6 months preceding the day of the presentation of the petition if to an unconnected person
        or within 2 years preceding the day of the presentation of the petition if to an associate
        Must be proved that the individual was insolvent at the time of the preference or became insolvent as a result of it
        Must be shown that the individual was influenced by the desire to prefer the creditor. There is a rebuttable presumption that the bankrupt individual was influenced by the desire to prefer the creditor where the preference is to an associate
      - Transactions defrauding creditors
        
        Transaction for an undervalue
        
        Intention to defraud creditors
        
        No need for individual to be solvent
      - Transactions at an undervalue
        
        Can bring a claim for this if the transaction is any of the following:
        
        a gift,
        
        in consideration of marriage or the formation of a civil partnership
        
        for a consideration the value of which in money is significantly less that the consideration provided by the bankrupt
        
        Transaction must take place within 5 years preceding the day of the presentation of the bankruptcy petition
        Must be proved that the individual was insolvent if the transaction took place between 2-5 years from the day of the presentation of the petition
        Insolvency of the bankrupt is presumed where a transaction at an undervalue is entered into with an associate of the bankrupt