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Hello. I am Ed, a Solicitor qualified in England & Wales with over a decade’s experience in the legal profession advising clients.
I specialise in Commercial Contracts, Business Transactions, Employment, Dispute Resolution, Personal Injury and Road Traffic Law and shall be reviewing your legal problem today.
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I sympathise with your predicament, but lack of finances (which lawyers call “impecuniosity”), bankruptcy and even death do not automatically terminate, void, or rescind a contract and none of those external factors are a defence to debt or breach of contract.
I know that it is unfair in the grand scheme of things and I fully understand the mental and emotional turmoil that commercial business disputes, litigation, and bankruptcy cause people but unfortunately the law is very cold and objective in its application.
Having said that, if you inform the other party that you are impecunious to pay the debt and have insufficient cash and assets to pay your creditors if you were made bankrupt, it is unlikely that the other party will go to the time and expense of pursuing you through the court or making you bankrupt as there would be no economic benefit of so doing.
I suggest that you negotiate repayment by instalments with the other party.
I hope this resolves your enquiry. Please revert to me if you require any clarification of my answer to your question and I shall be delighted to assist.