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Default notice on debt included in my bankruptcy

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13 posts • Page 1 of 21, 2

Default notice on debt included in my bankruptcy

Postby chippy1 » February 13th, 2017, 12:31 pm

Hi Mike,

Please can you help. Just read your comments from an old thread, that were really helpful.

Thank you for all the help you give on this website!

The comments I read were:

"Upon my advice they contacted the Official Receiver's ORs office and enquired if any shortfall debt from the future repossession can be included in the bankruptcy, even though the bankruptcy was over and finished, we were now close to four years from the start date of their bankruptcy.

As I suspected the ORs office confirmed that any debt from the repossession and subsequently shortfall once the home is sold will still be included in the bankruptcy debts, even though they were a mortgage and secured loan"


Mike, In situations like this when repossession/shortfall happens after the bankruptcy but the shortfall is included in the bankruptcy (as it was a secured debt at time of bankruptcy) should the default also be recorded inline with the bankruptcy order and reflect that the debt was settled only in bankruptcy?

Appreciate any help.

Thank you
chippy1
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Re: Default notice on debt included in my bankruptcy

Postby Debtwizard » February 13th, 2017, 8:37 pm

Hello chippy1 and a very warm welcome to the DebtWizard IVA and debt help forum.

I'm pleased you found the website helpful and informative.

If I understand correctly you went bankrupt and subsequently any repossession mortgage shortfall debt has been confirmed by your Official Receiver (OR) to have been included in the insolvency which means the mortgage lender is unable to pursue you for any loss following the prepossession and subsequent sale of the home.

Your query is a default notice that has appeared on your credit file?

If this is the case then it is my belief that the default notice has to be dated before the date of the bankruptcy, as is what happens in another form of insolvency, an Individual Voluntary Arrangement (IVA).

A couple of questions if I may.

Q. When was the date of your bankruptcy order?

Q. Was the mortgage you refer to in your sole or joint names?

Q. If joint names what has the other named person done about the shortfall debt?

Best wishes,

Mike
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Re: Default notice on debt included in my bankruptcy

Postby chippy1 » February 14th, 2017, 12:44 am

Debtwizard wrote:Hello chippy1 and a very warm welcome to the DebtWizard IVA and debt help forum.

I'm pleased you found the website helpful and informative.

If I understand correctly you went bankrupt and subsequently any repossession mortgage shortfall debt has been confirmed by your Official Receiver (OR) to have been included in the insolvency which means the mortgage lender is unable to pursue you for any loss following the prepossession and subsequent sale of the home.

Your query is a default notice that has appeared on your credit file?

If this is the case then it is my belief that the default notice has to be dated before the date of the bankruptcy, as is what happens in another form of insolvency, an Individual Voluntary Arrangement (IVA).

A couple of questions if I may.

Q. When was the date of your bankruptcy order?

Q. Was the mortgage you refer to in your sole or joint names?

Q. If joint names what has the other named person done about the shortfall debt?

Best wishes,

Mike


Hi Mike,

Appreciate your reply, thank you!

I was made bankrupt nearly 7 years ago and mortgage payments had stopped 8 months "after" I was made bankrupt.(4 months before I was discharged)

It was a joint mortgage but the other person was also made bankrupt a short while afterwards.

The mortgage was included in my list of secured creditors in my bankruptcy petition and my interest in the property was handed over to the OR when I was made bankrupt.


The Lender has written off the shortfall(and this shows as settled on my credit report) when property was sold 5 years ago.

The default on my credit file is showing when the property was repossessed and settled when property was sold even tho it has been confirmed to me that the debt/shortfall was "bankruptcy debt".

The default has correctly been recorded as "settled" but the issue is the date that the Lender has recorded. I was under the impression that when the debt(shortfall) became unsecured it then fell into my bankruptcy as "bankruptcy debt" and as discharge releases a bankrupt from all bankruptcy debt...the default should be recorded as the date of my bankruptcy and settled in discharge? As things stand this default will show for over 14 months after my bankruptcy dropped off my credit file.

Thankyou again for any replies,

Kind regards
chippy1
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Posts: 6
Joined: February 10th, 2017, 9:32 pm

Re: Default notice on debt included in my bankruptcy

Postby Debtwizard » February 14th, 2017, 12:00 pm

Hello Chippy1

I have lifted the section below from a report from The Information Commissioner, it's on page 7 and confirms your position, ie the default needs to be removed. The process on doing this is in the report.

The default date must be consistent with that of the CCJ/bankruptcy or IVA; therefore a default should be filed as being no later than the date of the insolvency order. In circumstances where the lender is not immediately aware, the default can be filed at that point in time. If evidence of the insolvency date is provided, the default date recorded at the CRA will be aligned.

The CRA referred to above is 'Credit Reference Agency', more on this link (p7).

Principles for the Reporting of Arrears, Arrangements and Defaults at Credit Reference Agencies

So you will need to provide evidence of the bankruptcy date, if you have already done this then the default needs to be 'religned' to that insolvency date and you could consider the following text.

Here is a template you can consider, I do not know where I got this but it seems to do the trick:
--------------------------------------------------------------------------------------------------------------------------------------
Dear Sirs

Re: Account Number xxxxxxxxxxx

After consultation with both the Information Commissioner and the Credit Reference Agencies, I am writing to you to request that you formally update my credit files in accordance with the Data Protection Act.

I was declared bankrupt on <Date of your bankruptcy>and subsequently discharged on <Date of Discharge>, and <name of creditor> was included within the Bankruptcy. For your convenience I have attached both my bankruptcy Order and Discharge Notification.

Currently the information that you have recorded against my name with the Credit Reference Agencies is factually incorrect, and despite several written requests to your customer services, as yet your company has failed to correct the entries as required.

• It is requested that if you intend to default the account, the default entry must be no later than <Date if your bankruptcy>, in accordance with the Data Protection Act.

• It is requested that you mark the account in some way as to indicate that it is settled or satisfied, in accordance with the Data Protection Act.

The Information Commissioner has indicated that I should allow you 28 calendar days from the date you receive this letter to comply, during this time you are requested either to update the Credit Reference Files correctly (of all three Credit Reference Agencies) or notify me in writing the reasons that you refuse to.

After the 28 days have elapsed the Information Commissioner has requested that I inform them if your company fails to update the records so that they may take any necessary enforcement action against your company.

I have included the link for the relevant information provided by the Information Commissioner here http://www.scoronline.co.uk/sites/defau ... _final.pdf

Yours faithfully


Enc:
Bankruptcy Order
Discharge Notification

--------------------------------------------------------------------------------------------------------------------------------------

Just to add, I would send this 'recorded delivery' and track it using the barcode on your receipt on the Post Office 'Track & Trace'

Trust this helps,

Best wishes,
Mike
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Re: Default notice on debt included in my bankruptcy

Postby chippy1 » February 14th, 2017, 12:09 pm

Debtwizard wrote:Hello Chippy1

I have lifted the section below from a report from The Information Commissioner, it's on page 7 and confirms your position, ie the default needs to be removed. The process on doing this is in the report.

The default date must be consistent with that of the CCJ/bankruptcy or IVA; therefore a default should be filed as being no later than the date of the insolvency order. In circumstances where the lender is not immediately aware, the default can be filed at that point in time. If evidence of the insolvency date is provided, the default date recorded at the CRA will be aligned.

The CRA referred to above is 'Credit Reference Agency'. more on this link.

Principles for the Reporting of Arrears, Arrangements and Defaults at Credit Reference Agencies

So you will need to provide evidence of the bankruptcy date, if you have already done this then the default needs to be 'religned' to that insolvency date and you could consider the following text.

Here is a template you can consider, I do not know where I got this but it seems to do the trick:
--------------------------------------------------------------------------------------------------------------------------------------
Dear Sirs

Re: Account Number xxxxxxxxxxx

After consultation with both the Information Commissioner and the Credit Reference Agencies, I am writing to you to request that you formally update my credit files in accordance with the Data Protection Act.

I was declared bankrupt on <Date of your bankruptcy>and subsequently discharged on <Date of Discharge>, and <name of creditor> was included within the Bankruptcy. For your convenience I have attached both my bankruptcy Order and Discharge Notification.

Currently the information that you have recorded against my name with the Credit Reference Agencies is factually incorrect, and despite several written requests to your customer services, as yet your company has failed to correct the entries as required.

• It is requested that if you intend to default the account, the default entry must be no later than <Date if your bankruptcy>, in accordance with the Data Protection Act.

• It is requested that you mark the account in some way as to indicate that it is settled or satisfied, in accordance with the Data Protection Act.

The Information Commissioner has indicated that I should allow you 28 calendar days from the date you receive this letter to comply, during this time you are requested either to update the Credit Reference Files correctly (of all three Credit Reference Agencies) or notify me in writing the reasons that you refuse to.

After the 28 days have elapsed the Information Commissioner has requested that I inform them if your company fails to update the records so that they may take any necessary enforcement action against your company.

I have included the link for the relevant information provided by the Information Commissioner here http://www.scoronline.co.uk/sites/defau ... _final.pdf

Yours faithfully


Enc:

Bankruptcy Order
Discharge Notification

--------------------------------------------------------------------------------------------------------------------------------------
Trust this helps,
Best wishes,
Mike



Hi Mike,

Really appreciate you finding this information for me. Its a big help!

Thank you again,

Kind regards
chippy1
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Posts: 6
Joined: February 10th, 2017, 9:32 pm

Re: Default notice on debt included in my bankruptcy

Postby Debtwizard » February 17th, 2017, 10:01 am

Hello chippy1

Always a pleasure to be able to help.

Would love to know how you get on, so please pop back sometime.

Best wishes,

Mike
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Re: Default notice on debt included in my bankruptcy

Postby chippy1 » February 18th, 2017, 9:06 pm

Debtwizard wrote:Hello chippy1

Always a pleasure to be able to help.

Would love to know how you get on, so please pop back sometime.

Best wishes,

Mike


Hi Mike,

Thanks again for your help,

Just needed to ask another question, hope its ok!

Can a mortgage Lender "write off" the debt(shortfall) without it being included in bankruptcy?

The Lender has written off the debt but is arguing (even tho mortgage account was included in my list of secured creditors in my bankruptcy petition and my interest in property was handed over to the OR) that as the debt wasnt included in the bankruptcy estate at the time of the bankruptcy order (repossession happened after bankruptcy started and property was sold by Lender after discharge) that they would not correct the default date.

Is the shortfall "automatically" a provable bankruptcy debt (under insolvency law section 382) or can a Lender simply write it off (without it being included in the bankruptcy) if they decided it wasnt worth chasing the debt?

I can show how the debt needs to be recorded (thank you again for those ICO notes) but is there any information I can provide (to support insolvency act 1986 section 382) that shows the debt is automatically "provable bankruptcy debt, when property was sold and the Lender has no control over this?

Under Insolvency act, section 382 it would seem that the shortfall (unsecured debt) is "automatically" bankruptcy debt, due to the fact that it was a debt/liability to which I became subject after the commencement of the bankruptcy (including after my discharge from Bankruptcy) by reason of an obligation incurred before the commencement of my bankruptcy. Insolvency law even goes on to say

"it is immaterial whether the debt or liability is present or future, whether it is certain or contingent or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion;

http://www.legislation.gov.uk/ukpga/1986/45/section/382

(1)“Bankruptcy debt”, in relation to a bankrupt, means (subject to the next subsection) any of the following—

(b)any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy



Whats making it difficult, is that the Lender never chased me for the shortfall and marked as settled on my credit file when house was sold but they say this wasnt becuase of the bankruptcy...their view is that they "chose" to write off the debt, so it was never included in the bankruptcy but Insolvency law seems to say as the debt(shortfall) became "contingent debt" (unsecured) when the house was sold, it "automatically" drops into the bankruptcy as "bankruptcy debt"

Does a Lender have the option to write off debt outside of the bankruptcy order(in doing so, keeping the default "live" for longer on your credit file) or have they got to write it off because the debt is bankruptcy debt and falls under Insolvency law?

Insolvency helpline told me that under "Insolvency legislation" the debt(shortfall) automatically drops into a bankruptcy and no one has control over if this happens, as its law.....its all really confusing and trying to relay that into facts in a letter form is difficult when you have no background in this area.

I'm no expert but it seems to me that the "law" is saying the shortfall is automatically bankruptcy debt(under section 382) but the Lender is saying something different. Almost as if, by saying its not bankruptcy debt, they can then negatively affect your credit file for longer? Its very frustrating and upsetting...

Many thanks again, really appreciate all your help
chippy1
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Joined: February 10th, 2017, 9:32 pm

Re: Default notice on debt included in my bankruptcy

Postby Debtwizard » February 20th, 2017, 9:59 am

Hi Chipp1

I will drop a line to see is James Jones has any thoughts, hopefully I might hear back later today.

Best wishes

Mike
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Re: Default notice on debt included in my bankruptcy

Postby Debtwizard » February 20th, 2017, 10:33 am

Just a thought Chippy1, have you telephone The Information Commissioner re this? I ask as they may give you the answer.

Full details including online chat here https://ico.org.uk/global/contact-us/

Best wishes,

Mike
How do we help at DebtWizard?

We can help stop the phone calls & threatening letters
We can provide you with a solution to get you back on the road to recovery
We put you in control of your debt

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Re: Default notice on debt included in my bankruptcy

Postby chippy1 » February 20th, 2017, 2:04 pm

Debtwizard wrote:Just a thought Chippy1, have you telephone The Information Commissioner re this? I ask as they may give you the answer.

Full details including online chat here https://ico.org.uk/global/contact-us/

Best wishes,

Mike


Hi Mike,

Many thanks for the link....sadly, they couldnt give me any information:

Quote from the ICO online chat :

"I'm afraid that I cannot answer this. You should speak to the lender for details on what happens to any outstanding debt"

They then felt I should contact the Insolvency department instead.

So I have spoken to the Insolvency enquiry line directly. They dont get involved with individual complaints but when looking at Insolvency Act, section 382 they have confirmed, there is no question that the debt is automatically, bankruptcy debt. Just now need to get the Lender to understand this....


Kind regards
chippy1
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Posts: 6
Joined: February 10th, 2017, 9:32 pm

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