Post by rebsrep on Dec 6, 2016 11:43:18 GMT
/rebsrep hat firmly OFF - I would post under my own username, but the mods on this forum don't allow anyone to have 2 accounts to give personal opinions. Hence to be clear I am NOT representing rebs on this thread.
The below figures are all approximations I haven't gone back through my records to get exact figures, so if percentages versus figures are slightly out then it's just because I'm using ball park to illustrate a point.
Several years ago before I became involved with rebs I did some consultancy work for an individual who later turned out to be less than honest character. He didn't pay his debts to me, or to his own solicitor (or VAT or HMRC or Leeds Council) and in the end one of them petitioned for his bankruptcy in an attempt to recover debts. I submitted my claim as part of the process.
In total the estate administrators found creditors owed circa £22k. The debtor had a house worth circa £150k but with £74k of equity in it. Happy days £74k to cover £22k. The house eventually sold and you would think that all creditors would get a 100% payout. However after the Accountants *(Top 10 practice, not Big 4 though) and lawyers had taken their cut there was only enough left for a roughly 25% payout. i.e. of the £74k recovered from the sale of the house £68.5k went in professional fees. Of which the Insolvency Service took £10k. Which is quite frankly staggering.
The justification by the professional advisor was that it was a difficult recovery with the debtor using every trick in the book to delay proceedings, adjourn court dates, set up negotiation/arbitration meetings, war of letters over minor items etc etc. He even quickly moved out of his house and put in a tenant with a small child, so that delayed it until their tenancy came to an end. The whole process took about 3 years. Apparently the accountants/lawyers took pity on the creditors and reduced their fees to ensure the creditors got something, don't believe that for a minute.
However in my experience of another couple of bad debts I've incurred in the past where the recovery was in single digits percentages, the 25% looks quite good.
The other lesson is that those stuck in the debt trap don't behave or think rationally. If the debtor above had simply sold his house himself he could have paid off the £22k, and had 50k left to either rent or buy a smaller house and not be a registered bankrupt.
The below figures are all approximations I haven't gone back through my records to get exact figures, so if percentages versus figures are slightly out then it's just because I'm using ball park to illustrate a point.
Several years ago before I became involved with rebs I did some consultancy work for an individual who later turned out to be less than honest character. He didn't pay his debts to me, or to his own solicitor (or VAT or HMRC or Leeds Council) and in the end one of them petitioned for his bankruptcy in an attempt to recover debts. I submitted my claim as part of the process.
In total the estate administrators found creditors owed circa £22k. The debtor had a house worth circa £150k but with £74k of equity in it. Happy days £74k to cover £22k. The house eventually sold and you would think that all creditors would get a 100% payout. However after the Accountants *(Top 10 practice, not Big 4 though) and lawyers had taken their cut there was only enough left for a roughly 25% payout. i.e. of the £74k recovered from the sale of the house £68.5k went in professional fees. Of which the Insolvency Service took £10k. Which is quite frankly staggering.
The justification by the professional advisor was that it was a difficult recovery with the debtor using every trick in the book to delay proceedings, adjourn court dates, set up negotiation/arbitration meetings, war of letters over minor items etc etc. He even quickly moved out of his house and put in a tenant with a small child, so that delayed it until their tenancy came to an end. The whole process took about 3 years. Apparently the accountants/lawyers took pity on the creditors and reduced their fees to ensure the creditors got something, don't believe that for a minute.
However in my experience of another couple of bad debts I've incurred in the past where the recovery was in single digits percentages, the 25% looks quite good.
The other lesson is that those stuck in the debt trap don't behave or think rationally. If the debtor above had simply sold his house himself he could have paid off the £22k, and had 50k left to either rent or buy a smaller house and not be a registered bankrupt.
