Tax credits over payment

sort_me_own_yard_out

Hello yet another question. Sorry

I owe 3.8k in tax credit over payment that at the moment they are deducting £118 (around25%). Per 4 weeks off my payment. Am I right in thinking that I will continue to pay the £118 until I am discharged? Then once discharged the debt is written off?

If this is the case what do I write down on my SoA? Will I then get an ipa for £118 as I have lived without it for 12 months? I know it maybe does not sound a lot for some people but to me it's a hell of a chunk and I probably wrongly at first assumed that I would get 100% of my tax credits once declared bankrupt.

Has anyone else got experience of tax credit debt?

Thanks in advance

fermi

http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter40/part6/part6.htm#40.102B

40.102B Recovery of overpayments of state benefits

(Amended December 2011)

There has been significant recent case law regarding the extent to which benefit overpayments can be recovered by the relevant benefit authorities following the making of a bankruptcy order.

In the case of R. (on the application of Steele) v Birmingham City Council URL="http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter40/part6/Notes/Notes.htm#12"]Note 12[/URL which was subject to an appeal by the Secretary of State URL="http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter40/part6/Notes/Notes.htm#13"]Note 13[/URL it was concluded that category 2, and category 3 overpayments, are not contingent liabilities for the purposes of the Insolvency Act and Mr Steele was under no obligation or liability to repay the overpaid benefit until the Secretary of State had made his/her determination to recover the overpayment. Category 2, 3 and 4 overpayments of benefit are not therefore bankruptcy debts and the benefit provider should not be included on the list of creditors. Consequently, these debts are not released on discharge and the benefit provider may decide to take any appropriate recovery actions available to them.

The position with regard to category 1 overpayments was clarified in the case of R. (Balding) v Secretary of StateURL="http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter40/part6/Notes/Notes.htm#14"]Note 14[/URL wherein the court found that the overpaid benefit was recoverable by virtue of the determination made before the making of the bankruptcy order and thus there was a liability to pay money under an enactment for the purposes of section 382(4) of the Insolvency Act 1986 and it was in all respects a bankruptcy debt. Category 1 debts are bankruptcy debts and should be included in the list of creditors. Category 1 debts are released upon discharge, unless incurred by fraud URL="http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter40/part6/Notes/Notes.htm#15"]Note 15[/URL.

Following the case of Secretary of State for Work and Pensions v Payne and another [2011] UKSC 60 the benefit provider may no longer continue to make deductions from ongoing benefits until the date of discharge.

PippaGirl_2

That's interesting. So what are

catagory 1 overpayments?

and

catagory 2 and 3 overpayments?

fermi

See the link.

PippaGirl_2

Aha!

Category
Award made
Award paid
Recovery decision
Treatment by official receiver
1

Before BO
Before BO
Before BO
Provable debt

2

Before BO
Before BO
After BO
Not provable, recovery action to be decided by benefit authority

3

Before BO
After BO
After BO
Not provable, recovery action to be decided by benefit authority

4

After BO
After BO
After BO
Not provable, recovery action to be decided by benefit authority

fermi

sort_me_own_yard_out

It is category 1 not fraudulent