Bankruptcy and Gov Repayments

[lionbait]

Hi All,

I am strongly considering bankruptcy.

Can anyone please let me know what may happen to debts to Gov services that I have. I believe that I have been overpaid on child benefit (approx £200) and have a fine from a council (£61) outstanding that I am refusing to pay as I paid in the agreed time scale but they started court proceedings before I was due to pay. (I'm not paying for their clerical error!)

Will these debts be included in the bankruptcy order?

Thanks and happy holidays,
LB

[Tau]

I beleive that the child benefit may be classed as a debt but im sure that fines are not included.

[sarah1975uk]

i thought debts owing to the state couldnt be included in bankruptcy ?? Im probably wrong though

When my nan died she apparently owed loads in council tax overpayments or something, my dad was beneficiary of her estate and when dealing with the debts nan had he offered settlement of her debt re council tax benefit overpayment and was told that they can come back to him at any time for remaining balances. Even though he wrote with payment saying full and final settlement. Hasnt heard anything in 9 years but has kept all corrospondance etc in case when he dies they come to me for anything as a knock on effect.

[Tau]

I included my WTC/CTC in my list of creditors. Not been told that they wouldnt be included.
Any tax from self employment is included as the tax man is seen as a creditor.

[sarah1975uk]

Originally Posted by Tau

I included my WTC/CTC in my list of creditors. Not been told that they wouldnt be included.
Any tax from self employment is included as the tax man is seen as a creditor.

yes surely debt is debt no matter how or who its accumulated with, therfore allowed in bankruptcy.

[bottomburp]

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[fermi]

Overpayments of "state benefits" are "provable" debts in a bankruptcy.

But until you are 'discharged' they have often been recoverable from ongoing payments/entitlement.

How they are treated in general is described here:

Unsecured Creditors

And Tax credits specifically here:

Tax Credits

For CTC/WTC the status of overpayments and their recovery before/after discharge depend upon when the "Final award notice (of repayment)" was issued in relation to the bankruptcy order.

But a 'Court of Appeal' case a few days ago (albeit specifically referring to IS overpayments) may now have a bearing on these if it's principle can be extended.

Secretary of State for Work & Pensions v Balding [2007] EWCA Civ 1327 (13 December 2007)

(there have been several rulings/challenges regarding benefits in bankruptcy and the situation is a little fluid)

Best to consult with your OR (if/when you have one, or talk to the Insolvency Service), but keep an eye on the latest info in places like this.

Lionbait: What do the fines relate to, and were the proceeding through the County or Magistrates Court?

[fermi]

Originally Posted by bottomburp

Some creditors take precedence over others - Inland Revenue, Customs & Excise etc, then secured creditors, then non-secured creditors.

Most "Crown Preference" was abolished in the Enterprise Act 2002.

Frequently Asked Questions about the Enterprise Act: Abolition of Crown Preference

[bottomburp]

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[fermi]

Originally Posted by bottomburp

Thanks for that... What I was trying to say, albeit badly, was that these are all creditors and they all get a "share" of your bankrupt estate - none are "above" the bankruptcy - they are all included.

Indeed they are not (I'm just being picky since I'm here rather than down the pub on a Sat night ).

But a few 'certain' debts (Student loans, awards under family proceedings, CSA arrears and some (but not all) fines) are not 'released' when you are discharged. But the specific exemptions for these must be prescribed in statute.

[bottomburp]

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[fermi]

It's a little uncertain exactly what the "fine" relates to. If it's a genuine mistake then it shouldn't be a problem, but if not then whether the debt is include in the BR depends on the nature of the fine and proceedings.

Any fine (as defined in the Magistrates Court Act 1980) imposed on a bankrupt for an offence is not provable. This includes parking fines and fines imposed as a result of criminal proceedings.

Fixed penalty notices issued on behalf of a local authority, including those in relation to the London congestion charge, are not fines for this purpose. They should be treated as provable debts and will be released on discharge from bankruptcy.

Without more info on the fine I wouldn't like to say for certain, although I suspect it would be wiped out.

The CB overpayments shouldn't be a problem, but it is ultimately between the OR and HMRC/DWP to sort out.

A call to the official Insolvency Service enquiry line might help: 0845 602 9848

[lionbait]

Wow...thanks for all the help everyone.
I have debts of around £50k. I am living abroad (outside the EU) and have no assets in the UK. I have no assets here either! Rented house, lease car etc...
I am married with 2 kids and i1 income. BR seems the best way to go as I can not keep up the payments from over here.
The Council Tax fine has come around because I owed about £75...I agreed a payment date with a lady on the phone and transfered the money over to the UK to pay the outstanding amout within the agreed timescale (10 days). They started the court proceedings before the end of these 10 days and, although I paid on time, they had already incured the coourt costs and want to pass them on. I have refused to pay the fees for their clerical error!
I keep writing to them to say I'm not paying and copied the letters to the court so if they go seeking it through the court I hope it will be thrown out.
Thanks again and hope you all had a good Xmas. All the best for 2008 for all the incredible helpers and those requiring help.
LB