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Stuart J
Stuart J, Solicitor
Category: UK Bankruptcy Law
Satisfied Customers: 22368
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street practice
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Dear Just Answer, We have a court case against a former

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Dear Just Answer,

We have a court case against a former employee which hasn't gone to trial yet. He has just sent a notification to us that his solicitors are no longer acting for him and that he is filing for bankruptcy. Where does that leave us with regards XXXXX XXXXX debt ?

How much does he owe?

In respect of what?

Customer: replied 3 years ago.

£47k and it was a loan he built up to the company that he worked at with us and then he left without repaying it

I'm sorry
to have to tell you that if he goes bankrupt, the debt is written off.

debts are not written off in bankruptcy and they are few and far between but do
include arrears of maintenance and student loans.

If he has a
house, which is not jointly owned, then the trustee in bankruptcy will sell my
house. If it is jointly owned, the trustee in bankruptcy will attach a charge
to his share.

All his
creditors will be lumped together and if there is any money left, they will be
paid in proportion.

Can I help

Customer: replied 3 years ago.

what happens if he goes bankrupt and then afterwards the court case is held and found in our favour. Does he have to go bankrupt again ?

Once he goes bankrupt all his declared debts are written off.

So after bankruptcy there is no debt for you to sue him over.

Customer: replied 3 years ago.

But he is not declaring it as a debt, that is why I am having to take him to court, to rule that it is a debt. And my logic is, that if the court case is after his declared bankruptcy then it is a new debt ? Would you agree ?

Customer: replied 3 years ago.

Also, what proof can I get off him that he is going bankrupt and it is not a ruse to get me off his back ?

It may indeed be a
ruse to get you off his back. Does he own a house? Is it in joint names? Do you
know how much it is worth and how much the mortgage is on it?

Does he have the money
to give you? Is he working? Employed or self-employed? Does he have the money
to give you?

Customer: replied 3 years ago.

Hi Law Denning,

I know that he has a house that he owns jointly with his ex-wife but I don't know what the mortgage is or the address at the moment. I know that he used to own a house in Bulgaria but I don't know whether he still owns it.


He has told me that the company that he was working at after ours, that he has left and that he is no longer working in the industry.


I understand how the mortgage and the charge could help me but how does the employment issue change things ? is there a certificate or register for bankrupts that I can check ?

Your solicitor can do
search at Land Charges Dept of Land Registry. It only costs couple of quid.

At this stage it is a
debt. He declares that as a debt (before or after court) and it is written off
in bankruptcy. That is what bankruptcy does.

If he has a house,
once you have judgement you can get charging order to put a charge on it which doesn't
escape bankruptcy provided you get charge before he goes bankrupt

Customer: replied 3 years ago.

Dear Law Denning,


He is contesting that he owes us the loan repayment. We are saying that he does, and so I started a legal case against him which is currently on-going, we are at the exchange of witness statements.


The defendant contacted me yesterday and said that he was now representing himself and that he was going to declare himself bankrupt. He also said that he had left his employer after us and was now not working in the industry.


I think that his tactic will be to declare himself bankrupt with the loan as a known debt or at least try and use it as a negotiating position.


Can I get a charge registered before the case outcome ?

You can only get a charge if he agrees or if you have a judgement.

If he declares the disputed debt it dies with his bankruptcy

Customer: replied 3 years ago.

Hi Law Denning,


That is the point I don't understand. We have emails from him admitting the loan, the only issue is he said that it was only repayable in the event of a loss in the business whereas we have provided evidence that there was a loss.


Does this change things ?

I'm sorry,
it doesn't matter if he be admits the loan in writing and there is a judgement.
If he then goes bankrupt, you lose the money as it is written off in the

If the loan
is disputed and he goes bankrupt, it wipes the dispute out, and your claim ends

The only
way to protect that, is either to get him to agree to give a charge against the
house or get a judgement and then charging order

Customer: replied 3 years ago.

Dear Law Denning,


Thanks, XXXXX XXXXX clarification purposes. I know that he has a house which as part of his divorce his wife lives in but he has a charge over. I do not know the amount of equity. When and if he applies for bankruptcy, does he have to name our company as a debtor ? and then as part of the bankruptcy, assuming we are the only debtor, would we be assigned his share in the property ?


Sorry if I appear dumb

Don't worry. You are not dumb.
I probably know nothing about your business either.

If he declares the debt in
the bankruptcy, (and it is most unlikely that he will not) all his assets
invest in the trustee in bankruptcy and after the trustees fees are paid, or
assets are divided in proportion between the creditors. The creditor owed the
most money gets the biggest payout (if there is one). The trustee will not be
able to realise the sale of the house until such time as the wife wants to move
or remortgage. Once that happens, the money in the house is dealt with in the
same way with other creditors. In effect, any bank loans, credit cards, debts
with utility companies in his sole name etc are all wiped out in the
bankruptcy. It is most unlikely that you will be the only creditor and expect
him to owe thousands of pounds on credit cards if he is indebted to you for

The only debts which are not
wiped out in bankruptcy are secured your debts.

In that respect, if there is
a second charge, there may be no equity to distribute between creditors from
the house.

Stuart J, Solicitor
Satisfied Customers: 22368
Experience: PGD Law. 20 years legal profession, 6 as partner in High Street practice
Stuart J and 2 other UK Bankruptcy Law Specialists are ready to help you

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