Insolvency Made Clear: A Guide for Debtors
Plain English, practical guidance for anyone facing demands over a debt they are struggling to pay.
Plain English, practical guidance for anyone facing demands over a debt they are struggling to pay.
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Effect Of Bankruptcy<br />
by giving notice to the bankrupt and to anyone else with an interest in the property<br />
and the court.<br />
Property which has been disclaimed does not go back to the bankrupt. Since the<br />
Trustee gets nothing from a disclaimer (they merely avoid a liability) it may be<br />
possible to persuade a Trustee to sell the property to a friend of the bankrupt<br />
<strong>for</strong> a token amount.<br />
Box 6:<br />
RELATIONSHIP WITH THE TRUSTEE<br />
The Trustee plays a crucial part in the life of the bankrupt. They can<br />
decide what the bankrupt can spend money on, what items they can<br />
keep and what is to be sold. They can apply <strong>for</strong> the bankruptcy to be<br />
extended beyond its usual length of a year. They decide whether they<br />
believe that the bankrupt has committed any misconduct. If the Trustee<br />
thinks the bankrupt has, the Trustee will be responsible <strong>for</strong> what<br />
happens next. If the Trustee feels they can rely on the bankrupt, they<br />
are less likely to dispute what the bankrupt tells them. For example,<br />
if the bankrupt has a good relationship with the Trustee, the Trustee<br />
will not be suspicious if the bankrupt says that an item is owned by<br />
the spouse of the bankrupt rather than the bankrupt themselves and<br />
so does not fall into their estate. It follows that it is vital <strong>for</strong> the bankrupt<br />
to get on with the Trustee at a personal level. A strong working<br />
relationship can be achieved by: 1) being open and cooperative when<br />
asked questions; 2) being realistic about what the bankrupt will be allowed<br />
to keep and not keep; and 3) not making any attempts to hide<br />
assets. If the Trustee is the Official Receiver, they are unlikely to care<br />
that the bankrupt opposed the bankruptcy petition, provided they<br />
acted honesty during the process.<br />
It is difficult <strong>for</strong> the bankrupt to keep calm when a stranger has so<br />
much control over their life. A Trustee should do their best to explain<br />
what they are doing and why. Not all Trustees are diligent. However,<br />
although it will take a large amount of ef<strong>for</strong>t to be polite and courteous<br />
to the Trustee, the ef<strong>for</strong>t will be rewarded. Put differently: there<br />
can be serious consequences of the relationship breaking down.<br />
Chapter 8 discusses ways in which a bankrupt can control the Trustee’s<br />
actions. These are challenging applications to make.<br />
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