I am being asked for a repayment for money I lent

[crash-dummy]

I hope you may be able to give some advice my brother became bankrupt recently after struggling with paying bills after he became ill with ms. he borrowed from me over a periond of a year or so to convert his two story house to accomadate his disability, after the usual hassle and expence of builders the cost was around 13000. uk pounds, he promised to repay me but struggled to pay anything he then sold his house and as promised paid me back in full, he had other creditors who where unsecured and could not affor to repay them, he tried an iva which was refused and so went bankrupt, I am now being asked by the reciever for the money he repaid to me, they are calling it a preferetial payment , what can I do I Cannot afford to repay this, the money he borrowed was for building my house which I have done, no money is left.
can you please advise what can be done.

[Oneeyedvic]

Not a lot. Unfortunately, the receiver is accurate - you need to be paid in line with everyone else - ie a few pence in the pound. You will also have to prove your initial debt of �13,000, preferably by way of money cmoing out of your account.

[themas]

Go here:
http://www.insolvency.gov.uk/freedomofinformat ion/technical/techmanvol1/Ch25-36/Chapter31/pa rt4/part4/part_4.htm

It is difficult reading because it mixes up company insolvency with personal bankruptcy. Look particularly at 31.4.33, 34 and 36.

In essence it seems to mean that, unless the payment to you took place more than 2 years before the bankruptcy, it will be treated as a preference. The only other possible getout is if you put pressure on your brother to repay you (see 31.4.34).

Could you argue that expenditure of the �13K caused your brother's house to sell for more than it otherwise would have done? For example, if it would have fetched �13K less without the work being done, then the other creditors would have been in the same position as they are in now if you had not lent the money. This is very much a long shot but might be worth looking into.

[Golden Shred]

You can either voluntarily sell your house and repay the money or wait until the receiver obtains an order and forces a sale. It will leave you with more money if you do it voluntarily. There is no escape. The receiver is bound by rules which in effect say that by the act of having claimed it from you he is irrevocably bound to do everything possible to obtain the cash from you, and to this will now be added interest, receivers costs and all legal costs. The �13,000 will quickly double if you delay, and you will have to pay �25.000 plus your own costs (about �10,000 to �12,000) at the very least if you let it go to court.

[crash-dummy]

I am having difficulty to understand how I can be in trouble for being paid back my own money. my brother was up to date with his creditors at the time of repayment he only fell behind after the advice of the company organising his iva they told him to stop paying everything.
I have a wife who is terminally ill with cancer and I am under enough pressure as it is how can they force me to pay back my own money, you cannot go into a shop buy something and then ask for your money back?
I have no spare money and he was unaware that he would go into bankruptcy at the time he paid me, how is that right.

[Oneeyedvic]

If you can prove that:

1) he was completely up to date with ALL his payments when he paid you back
and
2) you loaned him the original amount (by way of bank statements - �13k going out of your account and in to his)

then you may well havea case.

Unfortunately, a lot of people going bankrupt will 'hide' their money with friends and family - and hence this transaction will be viewed with a high degree of suspicion. If he was behind with any of his payments, I doubt you will get anywhere - it will be him sorting you out before his other creditors (preference creditor).

[themas]

The OR is saying you have been given preferential treatment when compared with the other creditors, and this is something the OR has the legal power to undo by demanding the payment back from you, however unfair that may seem to you.

Your original post says your brother paid you in full after selling his house, but that he had other creditors he could not repay and tried an IVA. Was he in the IVA when he repaid you? If so, he must already have been behind with his full payments.

If he was not in the IVA, are you absolutely certain that when he repaid you all his payments to the other creditors were fully up to date AND that he did not have any reason at that time to think he would be unable to go on making the full payments to them. If this is the situation, it is just possible you may have a case. You also need to know what your brother has told the OR about all this.

The OR has to apply the law, but does have some discretion in reviewing the circumstances of individual cases so it could be worth putting all your facts together and asking in writing for the decision to be reconsidered. If this is not successful you can, if you want, ask for it to be reviewed at a more senior level but do bear in mind what Golden Shred says about the possible cost implications.