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Cancelling bankruptcy?

Posted: Tue Dec 22, 2020 1:28 pm
by sarah2080
Both myself and my husband are bankrupted since July 2020, my question is can my husband cancel his bankruptcy at any point before we are discharged? A family member may potentially lend my husband the £16,000 he owes as a favour so he can pay off his debts and avoid being bankrupted.

Re: Cancelling bankruptcy?

Posted: Wed Dec 23, 2020 9:29 am
by Geraldine
Hi Sarah2020

Welcome to the forum :)

In theory a bankruptcy can be annulled if the origianl debt owed can subsequently be paid off. However it is not as simple as that. As well as the original debt the official receiver's fees and costs would also have to be paid in full. These will be at least £6000 and could be far more if the case has been passed to a Trustee (commercial insolvency practitioner). So to overturn your husband's bankruptcy the family member would have to pay at least £22,000

Given this you have to ask yourself whether it is worth doing. What is the reason he wants to overturn the bankruptcy? Generally speaking the only valid reason would be if your husband has more to loose by staying bankrupt. For example if he is a property owner with significant equity. If he has nothing to loose, I would say he is better off letting the bankrutcy run it course.

He will be discharged in July 2021. If the family member really wants to give him £16k they are better off waiting until then so he can keep the money.....

Re: Cancelling bankruptcy?

Posted: Wed Dec 23, 2020 5:52 pm
by sarah2080
Hi Geraldine,

Thank you for your reply.

The reason for wanting to cancel the bankruptcy is because he would like to buy a house as soon as he can. If we stay bankrupt we won't be able to buy a house for at least six years...(we don't own any properties)

I'm not quite sure how everything will work out, what will happen to his credit score, will it go back to how it was before the bankruptcy? What about the interest he was supposed to be paying for his credit cards? How will me still being bankrupt affect his chance of being accepted for a mortgage if he does annul the bankruptcy?

Re: Cancelling bankruptcy?

Posted: Sun Dec 27, 2020 6:48 pm
by Geraldine
Hi Sarah2080

As far as I am aware if he manages to annul his bankruptcy the record that he was bankrupt will still remain on his credit file for the full 6 years. So it will not help him get a mortgage and I think he will still have to wait until the record comes off his file.....