This is a small example of how an individual was found to have acted to the detriment of his general body of creditors and subsequently had the restrictions of his bankruptcy prolonged for a period of three years.
Mr Jones had debts which exceeded his assets by £67,000. His monthly outgoings exceeded his income by £960. Before going bankrupt he had unsuccessfully attempted to enter into an IVA with his creditors.
In April of 2007, again before his bankruptcy, Mr Jones received a bonus from work to the sum of £6,250. He arranged to for it be paid into his wife’s bank account.
Following his bankruptcy the investigation into his affairs determined that Mr Jones had spent his bonus by repaying approximately £1,700 to his creditors and the remainder in the following manner:
- repaying a debt that he owed to his mother
- repaying his wife’s creditors
- paying for a holiday
It was determined that Mr Jones had acted to the detriment of his general bodies of creditors. The restrictions of his bankruptcy were subsequently prolonged in March 2008 for a period of three years.
As well as the general conduct of Mr Jones a contributing factor to the decision may have the transaction with his mother. Depending on the facts, this could have possibly been a preference transaction that may have been subject to a challenge from the trustee. Whether or not that would happen is a can of worms. For more information see previous transactions.
Whether or not Mr Jones would have expected this consequence would depend on the advice he would have received prior to going bankrupt. There are certainly a number of issues that would should have been raised with him before he petitioned at court.
For more information go to the bankruptcy restrictions order page.
