Monday, 30 July 2018

Pointless Bankruptcy Petitions: How To Combat

You are on a low or no income. You have no assets. Nobody owes you money. You have no relatives or friends or those you have are in the best of health or financially as bad or worse off than you so there is no prospect of inheriting from them should they imminently expire. 
And you owe council tax. The council can't bring bankruptcy proceedings against you unless the debt is for at least £5,000. No creditor can: the £750 limit has been raised. But say you do owe £5,000 or more? 

The debtor in Lock v Aylesbury District  Council Ch Judge Hodge QC 9 July 2018 owed £8,067. She was living in social housing and dependent on financial support from her daughter. There was no satisfactory evidence that she had any present or prospective assets that could be realised if she was made bankrupt and there was nothing to indicate that any investigation of her affairs by the Official Receiver would bring anything to light. The bankruptcy order which had been made against  her was quashed. It was pointless.

The judge ruled that where a bankruptcy petition was based on unpaid council tax, there was a burden on the council to show that, on the face of it, a bankruptcy would achieve some useful purpose. 

There is no reason why a 'pointless' argument should not  be advanced by a debtor in respect of some other kind of debt in an attempt to avoid bankruptcy.

For much, much more on bankruptcy, see my book Breaking Law. It won't bankrupt you!