Not communicating with your Trustee

One of my former bankrupts recently made a cameo appearance on a popular television debating show.  Unsurprisingly they felt hard done by their experience of being a bankrupt and the costs involved in the process.

In a nutshell the bankrupt fell into arrears with their council tax and the local authority took bankruptcy proceedings for a debt of little over £1,200.

The partner at the firm I was working at at that time was subsequently appointed Trustee.  The bankrupt had a significant amount of equity in their property and their only creditor was the local authority.  Therefore on face value the bankrupt was "balance sheet solvent" (their assets were greater than their liabilities).  As such the bankrupt could apply to annul their bankruptcy.  

Annulment

Annulment is a procedure that cancels your bankruptcy order.  An order of annulment can only be made by the court.

You can apply for an annulment if:

• the bankruptcy order ought not to have been made (for example because the proper steps were not taken when obtaining the order); or
• all of your bankruptcy debts and the fees and expenses of the bankruptcy proceedings have been either paid in full or secured (guaranteed) to the satisfaction of the court; or
• you have reached an agreement called an “Individual Voluntary Arrangement” with your creditors to repay all or part of your debts.

It was evident that the bankruptcy could be annulled on the basis that creditors could be paid in full.  

I therefore attempted to telephone the bankrupt immediately upon receipt of the handover paperwork from the Official Receiver.  However, the bankrupt did not return my calls.  

I then wrote to the bankrupt recommending annulment and provided them with a guide explaining the process, unfortunately my letters did not receive a response.

As a last resort I instructed an enquiry agent to attend the bankrupt's property in an attempt to hand deliver a letter urging them to contact me.  This also proved to be unsuccessful.  

The Outcome

As a result, the Trustee reluctantly had to proceed with realising the bankrupt's assets for the benefit of creditors. The Trustee made an application to Court for the possession and sale of the bankrupt's property.  The possession order was duly granted and the bankrupt was evicted from their property, which was subsequently sold.  

Whilst creditors were paid in full with statutory interest and a surplus returned to the bankrupt, there were significant costs which could have been avoided.

If you are worried about bankruptcy or even how your Trustee in Bankruptcy is dealing with your case and live in Bournemouth, Croydon or London please talk to us.  We will hopefully be able to give you some peace of mind.