Making a tenant bankrupt?

by Readers Question

11:00 AM, 12th September 2016
About 4 years ago

Making a tenant bankrupt?

Make Text Bigger
Making a tenant bankrupt?

If a tenant owes a large amount in arrears why not consider making the tenant bankrupt as this alone will shake them? bankrupt

I’m not a lawyer but if the arrears are over £5000 it seems feasible with their assets used to pay off debts?

Worth considering?

Peter


Share this article

Twitter Facebook LinkedIn

Comments

Robert Mellors

11:08 AM, 12th September 2016
About 4 years ago

Hi Peter

They would need a huge amount of assets to make it worthwhile, because it would cost the landlord a lot of money to make the debtor bankrupt, then the funds raised from the sale of the debtor's assets are used first and foremost to pay for the cost of the Insolvency Practitioner (several thousand pounds I believe), and only then are the remaining assets (now converted into cash) distributed between ALL of the debtors various creditors. Thus, this is only really worthwhile doing if the tenant has lots of assets worth much more than their total debt. However, I do agree that in such limited circumstances bankruptcy (or the threat of bankruptcy) can be a way of recovering a debt owed to you.

David Asker

10:36 AM, 20th September 2016
About 4 years ago

Many people threaten bankruptcy with a Statutory Demand but few rarely see it through as Robert rightly says the chances of getting what you're owed are slim to none.

Also, the average costs for a solicitor to draw up a Stat Demand are circa £400 whereas to petition for bankruptcy will see you having to find a further £2,000 or so.

We would always recommend obtaining judgment in the County Court via MCOL. This will give you 6 years to decide how best to enforce it if it is not repaid with several options at your disposal. It may also be that in the 6 years the debtors circumstances change and they need the judgment to show as satisfied on their credit rating for a mortgage, loan or finance etc.

Lindsay Keith

10:49 AM, 16th April 2020
About 6 months ago

Anyone splashing out to go down the Bankruptcy route must keep in mind at all times the queue, who gets his money first?
It's not you even though you pulled the trigger. Don't forget that the dreaded banks always manage to come before you as an ordinary unsecured creditor? The secured creditors such as the dreaded banks may get their money, likely leaving only pennies if anything to be divvied up between you and others in your lowly position. Oh, Woe!

BTL Landlord

20:31 PM, 23rd April 2020
About 6 months ago

Reply to the comment left by David Asker at 20/09/2016 - 10:36
Hi David
Interesting thread I was thinking along the lines of bankruptcy for a tenant who’s in arrears but the fees associated are very high and there’s really no assets.
With MCOL can one use this route without informing the tenant then I assume the tenant will have to attend county court to defend themselves, if they don’t attend will judgement normally go against them?
I have tenant who owes nearly £3000 and I understand he receives housing benefit which he is now not passing on to me.
I’ve tried contacting the council without luck to report this and ask for direct payment.
It seems the councils are fully aware that tenants who qualify for housing benefit are not paying landlords and they are not taking any action on the tenants, therefore tenants are getting away with it.
Surely there must be a way to register such tenants on a benefit database and stop them from abusing government funds?
Thanks


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Welsh temporary lockdown - Is moving home permitted?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More