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Hi, if the individual has been declared Bankrupt, unfortunately, the debt would be written off and you would be unable to make a successful claim through the courts.

However, it is not that straight-forward.

Within 12 weeks of the bankruptcy being declared by the court, the Official Receiver will contact all known creditors. They will either confirm that they will act as the trustee or arrange a meeting to appoint one.

If you are owed money by a bankrupt or a company in liquidation, you have to make a formal claim to recover your money.

You will have to write to the Official Receiver if you have not been contacted. You should do this before a decision is reached about how the debts are being paid or you may lose the right to make a claim.

To make a claim you should complete a proof of debt form. If the official receiver is holding a meeting of creditors to appoint an insolvency practitioner you should be automatically sent a form to complete and return by a specified date. If you do not return the form by the specified date your claim will still be accepted but you will not be able to vote to appoint an Insolvency Practitioner.

There is a strict order of priority when it comes to paying out any money. The order is as follows:

1. secured creditors – they hold a fixed charge or security on an asset
2. fees and charges associated with the costs of the insolvency proceedings
3. preferential creditors – for example, wages of staff or contributions owed to an occupational pension scheme
4. unsecured creditors
5. interest payable on any debts

The trustee can accept all, part or none of your claim. They must explain their reasons in writing and you can apply to the court for their decision to be reversed or varied. I would suggest that you obtain legal advice if you do this.

The amount you will be repaid can depend on:

• how much can be raised from the sale or disposal of assets, money etc
• the rights of secured creditors – these will be paid first, potentially leaving less money to be shared out between other creditors
• the number of claims received
• how much of your claim is accepted by the trustee/liquidator

If the trustee/liquidator can’t repay the debts in full they will pay out as much as they can. This type of payment is called a ‘dividend’ and the amount you receive will be in proportion to the value of each claim being made.

Therefore, if the individual does not have very many assets and what little assets he does have, once sold, are not enough to pay his other secured debts, you will receive nothing. However, this should not put you off registering your claim.

If you wish to seek further clarification, please ask. Many thanks,

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