can any of the experts answer this question please.
What happens if an IVA becomes unaffordable due to downturn in trading partnership profits (husband & wife team) and bankruptcy is only option but only for the partner with main debts.Whlst I appreciate it is possible for the IVA to be renegotiated subject to the agreement of the creditors...
Is it possible for:
1. For the un-bankrupt spouse to carry on trading in the business as a sole trader
2.For the un-bankrupt spouse to purchase the share of the residential home ( in negative equity)
3. For the un-bankrupt spouse to the go for a DMP for their remaining unsecured debts
Also what would happen to other properties (btl) owned on mortgage jointly but also in negative equity would they just be taken or could the un-bankrupt spouse continue paying the mortgage and purchase the bankrupt spouse share for a nominal fee ?
The continuation of the business is imperative for survival
Many Thanks for any replies...This is a great forum !
1 As bankruptcy would bring about a dissolution of the partnership in any case, the non-bankrupt spouse could carry on trading in their own name - but they would need to account to the Trustee for any value in the former partnership, from positive capital and current accounts.
2 Yes - this would also be possible. It is usually negotiated at a nominal sum of £1 plus the costs of legal transfer which are usually £180 plus VAT.
3 Yes - a DMP would be possible in these circumstances.
The BTL properties could also be transferred to the non-bankrupt spouse in the same manner as described above.
As it was a Partnership all of the bankrupts debts would fall on the un-bankrupt. Individual partner are always responsible for each of the debts.
Last edited by David Mond on Thu Oct 30, 2008 6:53 pm, edited 1 time in total.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
Can you clarify something. I realise that joint business debts will be jointly & severally liable but what about individual credit card debts , I thought that these are personal to the individual?
I look forward to your reply
Interesting point. Individual debts on credit cards would not normally be caught under any partnership debts. However if the individual card has been used to fund part of the partnership business it could be argued (not always the case though) that part of that individuals debt is due from the partnership and hence a potential claim could arrive - not likely though.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
