Demand for preferential payment.

[DebtDevil]

My mother has had a demand for £19,000 by the solicitor company acting on behalf of trustee as they are saying I made a preferential payment to her 12 months ago.

Basically I had borrowed money in my mothers name to consolidate debts because I could not get credit myself.

12 months ago I could get credit in my name so took out a loan to cover this amount and bring it into my name. I would of left it in her name but wanted to bring the payments down and reduce the interest rates.

Then obviously I went bankrupt because of several problems

My mother obviously come over my house going MAD!

She does not have the money to pay this back and says she will just ignore the letter, dumped the letter on my door step and said sort it and left!!!

What grounds have I got to defend my mother as the payment was not preferential at the time it was to consolidate and move to improving my financial situation with lower payments and interest

[nanna58]

Re: Demand for preferential payment.

Don't worry someone will be along shortly to see what can be done xxx

[nightwatch]

Re: Demand for preferential payment.

has anyone been of help yet ?

[DebtDevil]

Re: Demand for preferential payment.

No help yet! Going to ring national debt advice line / step change charity tomorrow see if they can give advice or arrange speak to a solicitor. Ive been looking at the legislation online. I believe im in the right but its proving it.

[Never-In-Doubt]

Re: Demand for preferential payment.

Any help --> https://www.insolvencydirect.bis.gov...6/Part%206.htm

Surely you'd be better asking the trustee why they think it's preferential?

[Never-In-Doubt]

Re: Demand for preferential payment.

Your mother is a ‘connected person’ so the OR can go back two years for preferential payments.

When the payment is made to a connected person then it is presumed to be a preferential payment and it is for the BR person to prove it wasn't the intention at the time payment was made.. i.e. you were happily trading and solvent/employed at the time the loan was taken out and paid to the mother and then shortly afterwards, disaster strikes and you lose your job/business/a big contract and then becomes insolvent.

In this case you would say it was for loan consolidation which is good but then why did you later go bankrupt . Was it you presenting the petition or a creditor? Please clarify.......

[Riz]

Re: Demand for preferential payment.

I seem to recall that I mentioned in one of your previous threads that this could be looked closely at by the OR as a potential preference.

https://www.insolvencydirect.bis.gov...2/Part%202.htm

31.4A.30 Desire to prefer – connected party or associate

Where the person who benefitted from the preference is a connected party (see paragraph 31.4A.110) or an associate (see paragraph 31.4A.111), then it is presumed (unless the contrary can be shown) that the debtor was influenced by a desire to prefer [note 8] [note 9].

31.4A.32 Transactions not normally viewed as preferences if desire to prefer not a motivating factor

As explained in paragraph 31.4A.28, a key feature of a preference is the desire on the part of the debtor to put the beneficiary of the transaction in a better position in any subsequent liquidation or bankruptcy then they would have been had the transaction not taken place.
Simply because the creditor gains an advantage from the transaction does not, of itself, mean that the debtor had a desire to prefer that creditor. It would still be incumbent upon the office-holder to prove that the desire to prefer was actually a motivating factor.
An exception to this is where the transaction favours a person connected to or associated with the insolvent (see paragraphs 31.4A.110 and 31.4A.111) – in which case the desire to prefer is presumed unless the contrary can be shown (see paragraph 31.4A.30)

[SXGuy]

Re: Demand for preferential payment.

I had this issue also with my mother being my biggest creditor. I basically stated that at the time I had no intention of going BR. It wasn't until after I realised I had no choice. It can't be a preferential payment if the thought or proceeding of becoming BR hadn't been made yet.

[DebtDevil]

Re: Demand for preferential payment.

I petitioned my own bankruptcy, i contacted the company acting on behalf of the trustee and they stated that because it was my mum it is presumed and she would have no choice but to pay the full amount. I wasn't planning on goin bankrupt at the time but they stated if your borrowing large sums off you mum it an indicator that your already insolvent if u haven't even considered bankruptcy. I obviously owed alot of money more than i had assets but had never missed a payment or in any arrears? I dont know what defence i can offer as i only wanted to pay 2 loans off that my mother had taken out on my behalf and one in mu name to make the payments more manageable and less money?...

[Riz]

Re: Demand for preferential payment.

You will need to be able to show or argue that you were not insolvent at the time and had no desire to prefer in anticipation of a bankruptcy.

The only way they can actually force you mother to pay is to go to court to get an order telling her to, which they would then have the enforce somehow if she did not or could not pay.

So they would face the difficulty of

(a) Obtaining an order from the court, as you would obviously oppose this on the basis that it wasn't a preference.

(b) Even if they got an order, getting the money, as AFAIK they don't have any special powers with that above and beyond a normal CCJ.

[DebtDevil]

Re: Demand for preferential payment.

We intend to fight this dispute and i we are currently putting a letter together to explain the reason for the payments etc.
im guessing that they may just send a letter back justifying and saying they want the full amount. Do i just keep writing back saying we dispute the matter until they say we will take it court! I couldnt think of a polite way of writing "dont bother write again unless its court"Is it the judge who ultimately decides who has to pay? And without this they cant get a penny? If it did go before a judge and the judge acted in there favour would we be responsible for the court costs etc. if they believe they are right without a judge can they add interest or charges on the amount. Any advice would be grateful if u can try answer all these questions? Thanks....

[DebtDevil]

Re: Demand for preferential payment.

Can they also issue you with a default notice before proving that you actually owe the money to them in court. Just thinking of my mothers credit file...

[Never-In-Doubt]

Re: Demand for preferential payment.

Well a DN is specific to the consumer credit act. BR isn't so I'm surprised that a DN holds any weight as that'd be served under s.87 CCA(1974) which doesn't apply in this case.

If you mean they've added a default on the credit file then once you get it sorted you can argue for removal. It's still rather libellous mind you because you could argue that as you've never taken any form of credit with the OR that any default is unlawful - it's not a default (as you're not in default) - it's a civil matter and thus in my view, the OR trying to utilise the consumer credit act to suit seems wrong.

I could be wrong but I can't see where the OR fits into the CCA(1974) and where you defaulted when technically you've never had any agreement or contract with the OR.

[DebtDevil]

Re: Demand for preferential payment.

We intend to fight this dispute and i we are currently putting a letter together to explain the reason for the payments etc.
im guessing that they may just send a letter back justifying and saying they want the full amount. Do i just keep writing back saying we dispute the matter until they say we will take it court! I couldnt think of a polite way of writing "dont bother write again unless its court"Is it the judge who ultimately decides who has to pay? And without this they cant get a penny? If it did go before a judge and the judge acted in there favour would we be responsible for the court costs etc. if they believe they are right without a judge can they add interest or charges on the amount. Any advice would be grateful if u can try answer all these questions? Thanks....

Anyone have any and answers to the above? Thanks

[Riz]

Re: Demand for preferential payment.

Recovery process and potential action is explained here:

https://www.insolvencydirect.bis.gov...1/Part%201.htm

No default could be applied, because as said this is not that sort of matter, but a CCJ if obtained may well be on credit files.

31.4A.15 Decision to take legal action under conditional fee agreement

While the action will be brought in the name of the official receiver, the decision to take a legal action will rest entirely with Clarke Willmott, and will be taken only in the following circumstances:

• The action is against the correct beneficiary of the transaction
• There is proof that the debt is or was owed by that person, or that there is a valid cause of action against that person
• The beneficiary has assets against which a judgement could be enforced or, having considered the matter, Clarke Willmott are willing to proceed prior to assessing the assets of the beneficiary
• There is, having looked at the facts of the case, an 65% certainty that judgement could be obtained against the beneficiary.