1869 Bankruptcy / Debtor Acts etc

I think I need help! I'm really struggling with understanding debt / bankruptcy laws.

Situation:
1874, England. Jack is a destitute young man who only inherited debts from his father, who died four years ago. We're talking lots of debts. Say, above £ 200. For various reasons, Jack can't find skilled work and is insolvent.

Initially, I wanted to threaten him with debtor's prison, but I understand this wouldn't work after 1869 (not unless he committed fraud).

I read up on the Bankruptcy Act, the Debtor's Act (the one that abolishes imprisonment), and the Bankruptcy repeal and insolvent court Act (which only seems to apply to late insolvent debtors), all from 1869, and frankly I'm not sure what this means to Jack.

The text is available here: https://archive.org/details/bankruptcyactde00britgoog


From what I understand, creditors could present a petition to the Court if the debtor

• owed more than £50
• AND the debtor was a trader, or claimed to be a trader (also this doesn't seem to be required after 1861)
• AND payments were defaulted:
  • through fraud (which Jack's father might have committed)
  • through other stuff that's not relevant to Jack
  • or if the debtor has filed in the Court a declaration admitting his inability to pay his debts (which Jack could do)
    • I think this declaration cost £10, which could possibly be too much for Jack

My questions:

• Any assets Jack's father might have had are gone. There's nothing to liquidate. Would creditors have any reason for Jack to go bankrupt?
• Could Jack have filed for bankruptcy?
• What does happen if he doesn't pay? If his debts are way beyond what can be paid off, I can't imagine the creditors would be happy, right? Could he land in prison (in spite of the Debtor's Act)?
• If Jack is declared bankrupt, and the trustee / sollicitor assigned to manage his accounts realises after the fact that Jack is completely insolvent, would the trustee owe money to the creditors? Or Jack owe money to the trustee?

I've searched through the London Gazette, too, and found a couple of references to "avoiding imprisonment", but it's too obscure and not detailed enough for me to understand what happens to insolvent debtors.

Jack isn't at his best after his father (and mother and one-day-wife) die. He's a honest chap, but he's likely to make mistakes in handling his debts, so I have leeway to get him in trouble. But I don't want to go through complicated court proceedings or anything like that, as Jack's debts are only a looming threat in the book (just a subplot).

Thanks in advance for the help. I'm definitely no lawyer, as you can see.

waylander said:

What do you need for the story?

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Jack has a little sister to look after and doesn't want to be separated from her. He would like to work as a clerk, but has no work experience (except as an unskilled day labourer) and no references. I need Jack to be running out of options -- basically, he "secures" a job that pays a stupidly low wage, but his employer pays off some of his debts for him; if he refuses: prison, or at the very least workhouse and he can say good-bye to his sister.

Justobuddies said:

How would Jack's father have that much debt with no collateral to secure a large portion of it?

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Eeps, that's where my lack of financial knowledge really shows. Jack's father made bad business deals and managed to keep up a facade (gambling / opium sounds good too, though). Jack's father can be as rotten and cunning as required.

Maybe a simple solution to avoid this turning into some sort of court drama would be to have the people coming for the money be from some sort of loan shark. Maybe Jack's dad had an opium problem, or gambling debts. No courts or laws to have people tear apart, and the occasional visit from some cockney geezer with a knife may provide enough motivation to keep him thinking about how to come up with 200 pounds.

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Loan shark is definitely an option, but not the knife-wielding type; I'm thinking rotten lawyer or something.

Re. inheritance of debts -- I'm not sure. Good point. What I've gathered (and I'm far from 100% sure about that) is that the assets belonging to Jack's father would be used to pay off his debts, and Jack would inherit whatever's left.

What about this?
- Jack's father declares bankruptcy, but manages to keep this a secret from his wife + kids.
- Jack's father may try to fraud if necessary (without getting caught while alive), with or without the trustee's knowledge.
- When Jack's father dies, the trustee liquidates whatever's left of his assets and (if I understand things properly) the father's debts are written off OR (if I've misunderstood) debts are passed on to Jack.
- No matter what happens, Jack still has his own debts to pay off: three rather expensive funerals (father + mother + just-married-wife), plus a few extra expenses. He spared no expense, as he was counting on his inheritance to cover the costs of the funerals. Ha.
- Whoever the creditors are, Jack manages to keep them reasonably happy by paying off small amounts regularly. Until this stops working.
- Roderick (the employer) barges in, asking for money. Jack offers to work for him instead, and Roderick accepts... with conditions.

I sort of want to keep a legal trail, because that's how Roderick keeps Jack under his thumb. Basically, he becomes the loan shark -- now Jack owes him everything. One of the people Jack owes money to is one of Roderick's clients. I wrote him as a lawyer, but that's vague. He could be anything. He could be the trustee who managed the assets of Jack's father.

Thanks for the great suggestions!

Waylander, I can totally imagine Jack's father doing less-than-wise decisions; I like the idea of multiple mortgages. I'm starting to think he got over-enthusiastic about some investments, and lost it all when whatever he was investing in went bust.

Benbenberi, even from just the short excerpt I read, this book looks great. Barbara Weiss makes bankruptcy interesting.

Justobuddies said:

I'm not overly diverse on the period, most of my knowledge comes from Dickens's work. But he seems to often vilify bankers and accountants ie Ebeneezer Scrooge (partner in a counting house), Uriah Heep (I believe was a clerk in a counting house), and Josiah Bounderby (investment banker). So the knife wielding loan shark doesn't have to be the only option, any heartless man of business will suffice in the role.

Trying to avoid detailed legalities here: Perhaps father did have legal debt that drained the estate upon his death, and had shady business dealings resulting in other (maybe not official) debt to this Roderick character. Roderick (I assume is somewhat unscrupulous) persuades your character to come work for him on threat of further besmirching father's good name to the public. Bad enough his business had been secretly failing, but now to find out he had secret unlawful debt from (whatever dark secret).

ETA* If Roderick was father's business partner could even come to Jack as a friend warning him of all this bad stuff that could come out, and offer to take care of it all if Jack comes to work for him...with conditions

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Replace Roderick with an investment banker, and yes, that'd work for me. Perfect. This way I can split the legal debts (draining the estate) from the shady one (corrupt banker), handwave the details, and keep the semi-legal aspect.

(I'm swapping Roderick because, funnily enough, Jack's father didn't actually owe Roderick anything. That's all on Jack, who bought from Roderick, a photographer, a memento mori that Jack couldn't afford -- basically a photo of his dead family, which turned up to be quite expensive because of the time it took to arrange the corpses, travel expenses, extra portable-development-lab fees etc., on top of the cost of the photograph itself). (Jack isn't a creep; this was a thing back then.)

After reading something last night about inheritance of debts, I've also been thinking about tying Jack to his father's ongoing debt. If his father convinced Jack to co-sign a debt, one way or another, Jack would be responsible for it too.

This is odd, by the way. I didn't expect to spend so much time researching this. We're talking about one chapter in the novel; it's a subplot. But I think it's important, and besides, I'm learning a lot.