Tax credits, bankruptcy and DRO

joa1210

I all, I am discharged BR.
One of the debts I didn't list on my BR was tax credit overpayment as it was a joint debt, we continued to pay as we've always done.
I recently changed banks and rang up tax credit helpline to change bank details and the recordings said to direct debits twice within a year you need to write in.
So I left the weekly DD as it was, but stupidly forgot to put money back in the account to cover it 2 weeks running.
Set up a standing order and left it at that.
Nothing has been taken out for 6 weeks, no letter from Hmrc or anything, I've just called up to find out what's going on and the 'lady' informs me that it's gone to debt collection and will have to be paid in full.
Understandable I'm terrified after being through all this before.
My question is my husband is applying for DRO
If he lists this debt and it gets passed back to me does it become void due to my BR?
I haven't got the cash to pay it in full. I am having to re look at my employment to take on more hours at work as we are barely managing but then childcare costs will absorb most of the extra income as my daughter is 2 and we're not eligible for free nursery places.
TiA

thevdm

From my understanding you are able to include a debt in a past bankruptcy (assuming the debt was around at the time it could have been included in the bankruptcy) if you have forgotten about it.



As far as I am aware, you are not allowed to leave out a debt from bankruptcy (unless it's one of the excluded ones like a student loan) so every debt you were liable for should be included in this.


Were the direct debit payments towards the overpayment in your name or your husbands name?

joa1210

The payments have always come out of my bank even though its a joint overpayment.
The examiner knew about the payment when we did the interview as it was included in the SOA but never said to move it over into a debt or otherwise.
I could understand them cancelling it if I'd missed 2 months but I'd moved it to weekly as my husband gets paid weekly and as silly as it sounds we don't miss £5 per week whereas £20 out of my wage is missed as I'm only working 16 hours atm.
Stepchange have already told my husband to list it as a debt, which then means it will be passed back to me.

thevdm

I agree it's a bit fast acting to send it over to debt collectors after a couple of week, it usually takes a few months at least for that to happen. I'm guessing now they've transferred it over to debt collectors that there's no way to make the missing payments until you hear back from them.


It may be worth while trying to see if it can be added onto the bankruptcy, I personally don't know the rules around that or how to go about it so can't offer any advice there.



Once it has gone over to debt collection I highly doubt they will only settle for the full amount and may be able to restart the £5 weekly payment if it can't be added onto the previous bankruptcy.

Minkym00

Going on what you’ve said I think you stand a good chance here. There’s no fraud involved right? You’re debts were written off at the date of the order whether you listed them or not. As it was a joint debt your husband then became solely liable. When he gets his DRO then that means his liability will be written off, and they cant come after you as your liability was already written off.

debt_doctor

Hi,

If this tax credit over payment occurred before your bankruptcy date then you have no liability to pay it. (It does not matter that it wasn't on the forms and no monies should have been deducted from you - but could be from husband.)

If husband is going to enter in to a DRO then the full amount of the over
payment MUST be demanded from him prior to the DRO otherwise it is not a qualifying debt.

Does he have a formal demand / letter asking for the full amount of the over payment to be repaid?

DD

joa1210

Thanks DD
Yes it dates back to 2011 and maternity leave.
We've had no correspondence of any kind from anyone yet.
She just checked the account.
When I asked about correspondence, she replied they do not have the resources to send out letters with information on that should already know and it was my responsibility to call them to find out why, even though I had a DD still showing on my bank.
She was less than helpful and informed me she didn't want to upset of worry me but that's how it is.
We're just scanning in all the info for the DRO into the computer to email over, should we wait for the letter RE this?
Thanks

debt_doctor

Your husband must have been asked for repayment of the full over payment before he applies for a DRO.
He should ask them for a letter showing the full amount of the overpayment - it they wont do this then he needs to make a formal complaint.
Complain here: https://www.gov.uk/tax-credits-appeals-complaints/complaints

Don't get caught out - Tax credits are a bit useless about amounts owed and they need to be challenged.

Good luck.

DD