1) you are not liable to pay your father debts
2) your liability is limited to property inherited by you from your father
3) your father can take legal proceedings to declare himself an insolvent under provisions of insolvency and bankruptcy code
Filing ip petition in Hyderabad
Dear sir, my father runs a small business. 10years back he took a small loan from local lender for more interest. At that time his business was running dull and inorder to clear the debt he took loan for 9rs interest. The chain continued like that and now he is in debts for more than 40lakhs with local finance businessmen. Among them only around 15lakhs is actual debt and the other is interest. He is 60plus and is also physically handicapped. His health is not cooperating to continue his businesses and clear his debts. Neither he nor we have any asset in our name. I am a small scale employee and my 20yrs earnings will not be enough to clear those debts. Can you please help us in guiding the process of filing ip and tell about its consequences. Will i be liable to pay his debts? Approximately how many days does the process of completing ip usually take?
Asked 8 years ago in Civil Law
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3 Answers
1. Askyour father to apply for Insolvency proceeding beofre the NCLT.
2. If he has no money to repay the debt then the Tribunal case adjudge him as insolvent to save him from making further payments.
3.You being is his son has no legal bindings to repay the loan.
An individual can file an insolvency petition if he/she is unable to pay his/her debts and needs protection from creditors. Filing of insolvency is governed by the Provisional Insolvency Act of 1920.
An individual can file an insolvency petition if he/she is unable to pay his/her debts on fulfillment of any of the following three conditions:
Debts amount to more than Rs.500
Individual is under arrest or imprisonment in execution of a money decree
There is an subsisting order of attachment against his/her property in execution of such decree.
The distribution of assets of an insolvent individual are executed as per the priority of debt provided by the Provincial Insolvency Act of 1920. Under the Act, the following dues have highest priority to all other debts:
Debts due to the local government or any local authority;
Salary or wages, not exceeding Rs.20, of any clerk, servant or labourer, for services rendered to the insolvent individual during four months preceding the date of presentation of insolvency petition.
Rent due to the landlord, for an amount not exceeding one month’s rent.
Once the above payments are made, all debts proved in the insolvency petition are to be paid ratably according to the amount of debts, without any preference amongst the creditors. After the order of adjudication and taking into consideration the report from the official assignee or receiver, the court may grant an absolute order of discharge. The order of discharge releases the debtor from all debt payable, except for any debt due to the Government and any debt incurred due to fraud or fraudulent breach of trust.
You will not be liable for any payment, the creditors cannot hold you responsible for your father's loan.
