Making a tenant bankrupt?

by Readers Question

11:00 AM, 12th September 2016
About 2 years ago

Making a tenant bankrupt?

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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



Comments

Robert Mellors

11:08 AM, 12th September 2016
About 2 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 2 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.


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