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Settlement Agreement and Bankruptcy

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Settlement Agreement and Bankruptcy

Postby ParkerQ » Sun Oct 15, 2017 3:15 pm

A former employee of mine accepted a settlement agreement from me some time ago.

I have since found out that this former employee has breached a number of the clauses in our agreement.

I have asked for the money back that I paid her due to her agreement but she has said that she doesn't have it.

I am now faced with the option of whether or not to sue.

I could sue her and would likely receive a judgement in my favour, but if she doesn't have the money or assets to pay me back and then decides to go bankrupt, would that mean that her debt to me would be wiped as a result of the bankruptcy?

Everything I have read online leads me to believe that it would be wiped. From what I can tell only student debt, debts that have arisen as a result of fraud and criminal fines/restitution debts handed down by criminal courts can survive bankruptcy. Some clarification on this would be really helpful. Thanks
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Re: Settlement Agreement and Bankruptcy

Postby atticus » Sun Oct 15, 2017 4:02 pm

The answer to the question is "yes".

When a person is bankrupt, he or she has not enough money to pay all his or her debts. Bankruptcy (in theory) takes such assets as he or she has to pay those creditors something towards those debts. And that is that.
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Re: Settlement Agreement and Bankruptcy

Postby ParkerQ » Sun Oct 15, 2017 4:19 pm

Thought as much. She's pretty much said that if I sue her and win she'll go bankrupt. She has zero assets. She doesn't own any property, she doesn't even own a car but I thought that if I got the judgement in my favour I may be able to pursue it if her fortunes changed. But if bankruptcy would wipe the debt then suing her would just be pointless.

The debt charity step change says the following debts aren't included in bankruptcy. When they said personal injury debts were not discharged I did have some hope that there might be other civil debts that aren't discharged also.

Child maintenance arrears, if the arrangement was set by the CSA or Child Maintenance Service
Criminal fines, compensation orders and victim surcharges from a magistrates’ court or Crown Court
Debts you take out after the date of your bankruptcy order
Debts taken out fraudulently, for example benefit fraud
Mortgages and other debts secured against your home, if you want to keep the house
Social Fund loans
Student loans
TV Licence arrears
Court orders telling you to pay compensation to someone for personal injury
Payments ordered by a court as part of family proceedings, for example in divorce cases
https://www.stepchange.org/debt-info/de ... uptcy.aspx
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Re: Settlement Agreement and Bankruptcy

Postby Smouldering Stoat » Sun Oct 15, 2017 5:01 pm

The key thing is that if the debtor goes bankrupt it is because there isn't enough money to settle their debts. Even if the debt to you weren't discharged, then there still wouldn't be enough to pay you.

If she's not got enough money to repay you, then it's not the possibility of her going bankrupt that makes suing her pointless, it's because there's no money available to pay you back. Everyone who contemplates bringing an action against another should take a commercial decision about whether it is possible to enforce any judgment: don't throw good money after bad by incurring the costs of a futile action.
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Re: Settlement Agreement and Bankruptcy

Postby atticus » Sun Oct 15, 2017 5:42 pm

and the excellent copying and pasting won't get past that point. If there is no money, you won't be paid.

Part of the reason for the exception identified by the OP may be that many defendants in personal injury cases are insured - there is an insurance company to pay out.
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Re: Settlement Agreement and Bankruptcy

Postby ParkerQ » Sun Oct 15, 2017 7:59 pm

Of course, you all make sense. Suing someone with no money is idiotic.

The only reason I even entertained the idea was that before our working relationship went sour she bragged to me that she was likely to receive some sort of inheritance at some point in the future.

I have no idea if this is true. I just thought that if I received a judgement in my favour I could wait until she received the inheritance and then get my money. But if bankruptcy wipes the debt there would seem to be little point in doing this. I think the only way it could work would be if her inheritance comes through during the 12 months that she's bankrupt. I could be wrong but I don't think the debt is fully discharged until the 12 months are up. But if it comes through after the 12 month bankruptcy period then I don't think I'd be able to get access to it.

Sounds like too many what ifs and maybes for it to be worthwhile I think.
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Re: Settlement Agreement and Bankruptcy

Postby atticus » Mon Oct 16, 2017 7:57 am

You don't have to make her bankrupt. There may be good reasons for her not to file for bankruptcy.
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Re: Settlement Agreement and Bankruptcy

Postby ParkerQ » Mon Oct 16, 2017 9:21 am

I do understand that. But it was she who stated that she'd go bankrupt if I sued and won. She's not someone with much to lose. No assets to speak of and I'm sure she'd manage without being able to get credit for six years.
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Re: Settlement Agreement and Bankruptcy

Postby dls » Mon Oct 16, 2017 11:30 am

Many people in real debt welcome bankruptcy - particularly if paid for by somebody else.
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Re: Settlement Agreement and Bankruptcy

Postby 3.14 » Mon Oct 16, 2017 1:20 pm

dls wrote:Many people in real debt welcome bankruptcy - particularly if paid for by somebody else.
yep
Hide in the noise. #hackerwisdom
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