Making a tenant bankrupt - Is it worth it?

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    Making a tenant bankrupt - Is it worth it?

    Hi All,
    This question is in relation to my previous post here https://forums.landlordzone.co.uk/fo...or-rent-arears where I now have had the Possession hearing, had it ruled it my favour and am now working on the warrant. The other avenue I need to pursue is getting my money back. The tenant DOES work so I am looking at attachment of earnings. The other option is to make them bankrupt. I was wondering if anyone else here has any experience of this and if it is worth pursuing?
    The tenant owes me about 9k but they hardly have any of their own possessions and is always in debt (I have seen a bank statement). They already have an horrific credit score so I am not sure what more I could get from making them bankrupt. One thing I did read though is that the “official receiver” takes control of the tenant’s finances completely, but it didn’t go into much detail about it, can anyone elaborate a bit more on this?

    Thanks,

    #2
    I don't think you'll achieve much by making the tenant bankrupt other than making it nigh on impossible for the tenant to rent again. A CCJ is enough to make landlords think again but full blown bankruptcy...good luck!. By the sounds of things you are not their only creditor which means any surplus money will be divided between all of you and people are usually discharge from bankruptcy after a year so you could very well end up getting less back than if you are the only creditor with an attachment of earnings.

    Does the tenant earn £30,000 or less? If so then (s)he might go for a Debt Relief Order instead which means you'll get diddly squat back.

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      #3
      I had a tenant who owed me money and refused to pay me for a Utility and rent and ignored the terms of a lease.
      Things went on that I cannot put in writing.
      I looked at making them bankrupt and I believe it would have cost around £800 But I would have had great satisfaction in doing so.
      I won a County Court Claim and the Bailiffs went in and were paid by Credit Card.

      If I was in the same situation now I would get a solicitor to write to your tenant and say that unless you get paid or come to some arrangement for you to be repaid you will apply to the Bankruptcy Court (if there is such a thing) to make them Bankrupt.

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        #4
        If they are working but are simply to stupid/irresponsible to manage their money then yes i would apply to make them bankrupt, there has to be consequences for stupid and reckless actions..... in this case they will never rent in the private sector again, that is a good thing for all of us, you would be assisting the whole of the PRS from avoiding this horror of a tenant !!!!

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          #5
          Making someone bankrupt is a double edged sword.
          It obviously has massive consequences for the person being bankrupt, but it also usually clears the debts owed, so there's little or no chance of getting your money.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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            #6
            https://www.gov.uk/apply-to-bankrupt-someone
            It will cost £1300

            Then, I think, the official receiver takes the first £6k as fees. You may get something if there is anything left over.

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              #7
              Council made an ex-tenant of mine bankrupt - £15k+ council tax debt. Result was me & a dentist surgery he owed money to ended up with debts wiped. And we both had court debt orders.

              Think bankruptcy is of more benefit to debtor than creditors if he's got other ways (eg partner) of going forward for rentals, credit etc.
              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

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                #8
                Making someone bankrupt, is expensive process. What is the aim your trying to achieve? If the person is working, I would try and get money owed from the salary - via attached earnings. You can also freeze bank account so that the any savings are secured.

                If you are successful in making them bankrupt, that's the end of you ever seeing your any money, while if you get a CCJ you can at least try and recover by debt collection agency or bailiffs.

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                  #9
                  How did they get the new place? Did they give false references?

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                    #10
                    As others have said it doesn't really seem to be in your interests to make them bankrupt as it will clear their debts.

                    From a financial point of view it seems best to go for Attachment To Earnings.
                    There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

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                      #11
                      Ok thanks all, I guess attachment of earnings it is.

                      Comment


                        #12
                        Originally posted by DoricPixie View Post
                        I don't think you'll achieve much by making the tenant bankrupt other than making it nigh on impossible for the tenant to rent again. A CCJ is enough to make landlords think again but full blown bankruptcy...good luck!. By the sounds of things you are not their only creditor which means any surplus money will be divided between all of you and people are usually discharge from bankruptcy after a year so you could very well end up getting less back than if you are the only creditor with an attachment of earnings.

                        Does the tenant earn £30,000 or less? If so then (s)he might go for a Debt Relief Order instead which means you'll get diddly squat back.
                        The secured creditors are paid first, and then unsecured are paid, possibly pro rata.

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                          #13
                          Originally posted by gnvqsos View Post

                          The secured creditors are paid first, and then unsecured are paid, possibly pro rata.
                          It doesn’t sound like this tenant has much in the way of assets though.

                          Comment


                            #14
                            I have just been informed that the tenant is now on benefits. Someone else advised me that if this is the case then they will likely be claming benefits for the rent too - which has not been passed onto me. Does anyone know if this is how benefits work? I can't see how/why the tenant would NOT claim for rent. Is there any way I can use this to my advantage by contacting benefits directly to make them pay directly to me? And of course, this is fraud right? (if she is doing that), so I can report her for that too. I am wondering if I could use this as leverage to get her to pay some of the rent...

                            Comment


                              #15
                              If they're on benefits, you can request that an element related to housing be paid to you directly, although it would be difficult to imagine that anything would actually come through before you evict the tenant.

                              It isn't fraud.

                              Your chances of recovering any of the money owed by the tenant have just become close to zero.
                              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                              Comment

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