Bankruptcy discharge and subsequent bequest in a will

BB&B

Poodle34 wrote: »

I've just read this thread with interest. BB&B, why would the OR allow the bankrupt to keep some inheritance? Surely all the money would have to go to pay off the creditors if was less than the amount of the bankruptcy? Also, is it down to the individual OR to make this decision?

Yes and no!

No - Technically all that is owed in the bankruptcy, including all costs and charges would be taken from the inheritance, so:

Yes - If the inheritance was large enough they IS could take all that is owed and then leave you with the balance

Yes - You can negotiate with the IS (which is recommended) to keep a portion - if you are sensible about the %'s most ORs can be quite generous

Yes - id the amount of inheritance is of a size that it would cost the IS more to administer and deal with (Usually amounts of £1000 or less), in which case most ORs say keep it.

And as to how the decision is made, well for larger amounts it is to handled by your OR, it is handled by the RTLU and/or an nominated IP; for small amounts the OR will seek advice from the HQ Tech Dept.

Hope that explains a bit

Tim

BB&B

BaldEagle wrote: »

Really? Several years after discharge? How so?

In a couple of cases recently:

Piddled off neighbours, finding out about the past bankruptcy and stitching the neighbours up (A very common route!!)

A piddled of family member who decided that the share they got was not big enough and wanted more

Banks 'suddenly' having a "Whoops we forgot to notify" purge

And the most common:

Solicitors being deep financially audited and in the process finding that they 'failed' to comply with the Solicitors Regulation and then carrying out retrospective person checks - I am aware of this in one case after 16 years, and the OR did bite [hard]

Tim

BB&B

wookie999 wrote: »

Good thread, with reference to IPA following JCS1 Post , if say after Discharge you where to inherit a lump sum, is it only the intrest on the lump sump, or will they take more, i personally would inform the right away, but would be interested on the rules on this one

If the cause of the inheritance occurs after discharge, AND an IPA/O is in place, then technically any interest earned in the bank, building society, etc is classed as income (and is also taxable), so can be calculated into any IPA/O

In practice it would have to be a decent whack before the IS would count it though, as it would cost more to administer than the amount collected

Tim

Ineedaname

I guess if it was in the will that the lump sum was to be put into Trust then the OR couldn't touch it depending on the terms of the Trust fund? But perhaps take the interest or any regular payments from the Trust as per BB&B's advice above.

Surely though any interest on a lump sum given direct wouldn't be relevant as the OR would take what they needed straight away anyway?

BaldEagle

Thanks for responding, Tim. However I'm now a bit confused. So are you saying that a discharged BR who inherits money in a will could still have to pay it to the OR even if the death occurs years after discharge, no IPA/O or BRO is in place?

wok_boy

BaldEagle wrote: »

Thanks for responding, Tim. However I'm now a bit confused. So are you saying that a discharged BR who inherits money in a will could still have to pay it to the OR even if the death occurs years after discharge, no IPA/O or BRO is in place?

I think logic would dictate if an IPO or BRO wasn't in place then there is nothing the OR can do.

Or am I wrong in using logic, where government departments are concerned?

Ineedaname

I'm pretty sure that's the case Wok Boy.

Still in BR year - must inform OR
Discharged but and IPA/O in place - must inform OR
Discharged and no IPA/O in place - no need to inform OR
Discharged and IPA/O ended - no need to inform OR

If I've got that wrong please clarify for everyone.

BaldEagle

Well that's what I thought too. My brain hurts...

debtinfo

what BB&B was getting at is that if the person dies during the bankruptcy the OR can still claim it years later if it takes that long to sort the will out

SunshineBear

I was under the impression that if the money was put in a trust it couldn't be claimed by the OR.

I have my life insurance in trust and was told that in the event of my death it couldn't be used to pay off the debt. My OH's isn't and would be used.