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Pensions & Bankruptcy

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I'm messaging on behalf of my dad, he is 62 years old and due to retire within the next few years. He has a private pension which is now worth £21,000, and another worth about £4,000, He also has a NHS pension as he works as a hospital porter and has done for the past 17 years.

He had to declare himself bankrupt in December 1999, when he had his own business. During the past couple of years he has received multiple letters from a Solicitors asking for him to sign his pension over to them to pay off his creditors from when he went bankrupt.

We have got in touch with numerous people from citizens advice who say that he has to hand over the pensions to them. We decided to seek some legal advice and was told that because he went bankrupt before 2000 he has to hand over the pensions, the Solicitor advised us that if the creditors no longer exist then the money will go to the Solicitors who are writing to him. We asked for a list of the creditors he owed this money to, when we received it we found that the majority of them no longer exist. He was advised at the time by the courts that his pensions would be safe and wouldn’t be touched. We feel he has been wrongly advised.

We are finding this extremely difficult to understand how all of this can be legal, its just a hidden way of stealing money from innocent people.  My dad has worked his whole life and saved money towards the day he retires and someone is going to take this away from him and put in their pockets.

We are not going to let them take his pensions without a fight therefore thought about coming to you for advice. I really hope you can help us.
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Comments

  • sourcrates
    sourcrates Posts: 29,227 Ambassador
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    edited 22 April 2021 at 8:12PM
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    I`m afraid they may be correct.

    The law changed on the 29th May 2000, after that date, your pension rights were protected, and did not form part of your assets in bankruptcy.

    Before that date, it was different, any pension rights that had not already paid out to the bankrupt were treated as part of the bankrupt’s estate and vested in their trustee in bankruptcy, to be realised at some date in the future when the bankrupt was entitled to access their pension.

    See here -

    Bankruptcy: what will happen to my pension? | The Gazette

    If you were made bankrupt before this legislation came into force, it is likely that your personal pension has already vested in your trustee in bankruptcy, and they will be entitled to call upon that once you are of an age to access the pension fund. 

    Your dad should have taken legal advice at the time unfortunately its too late now.

    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Minkym00
    Minkym00 Posts: 775 Forumite
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    Whatever you were advised, when the Welfare Reform & Pensions Act 1999 came into force in 2000 pensions were excluded from the bankruptcy estate. Before that date they were not, and are considered an asset that will be claimed by the Official Receiver. See here for the official guidance https://www.gov.uk/guidance/technical-guidance-for-official-receivers/57-pensions
  • karly87uk
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    What’s really frustrating is that the companies he owed money to back then, do not exist now. So who will the money go to? He sort legal advice back then and was advised it would be safe, but I guess they weren’t telling the truth. 
    It’s so frustrating. 
  • GeordieGeorge
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    If the companies were bought or merged it may well go to the successor companies or purchasers. 
  • karly87uk
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    The companies have gone bust, they weren't bought out. We were told that the money will go in the Solicitors pockets!!

  • sourcrates
    sourcrates Posts: 29,227 Ambassador
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    The only thing you can do is invite said solicitors to take you to court, then put yourself at the mercy of the judge.

    The court may agree with you that as the original creditors no longer exist, lining the solicitors pockets best serves no one in this instance, they do not always follow legal precedence.

    I would not hand anything over without a legal fight first.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • GeordieGeorge
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    karly87uk said:
    The companies have gone bust, they weren't bought out. We were told that the money will go in the Solicitors pockets!!

    Yes, that can be what happens to companies when people who owe them money go bankrupt. It’s a bit ironic, really.

    I understand your frustration, it must have come as an unpleasant surprise, but it does seem that, given the dates, you may not have any option here.
  • fatbelly
    fatbelly Posts: 20,835 Forumite
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    You said the value of pensions was 21k plus 4k plus X (the NHS pension).

    It might be worth finding out what X is so you know what you are dealing with.

    Then how much are the trustees demanding?

    If you are left with a surplus it may be best to just go with it rather than risk court proceedings with more fees.

    However if the value of the pensions does not cover creditors plus fees then dig your heels in - you have nothing to lose.

    Although legally there does not seem to be a strong case, sourcrates is right that once with are with a judge anything can happen. I've seen it many times that a judge just goes with his gut and tells the claimant to appeal if they don't like it.
  • Minkym00
    Minkym00 Posts: 775 Forumite
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    karly87uk said:
    The companies have gone bust, they weren't bought out. We were told that the money will go in the Solicitors pockets!!

    Yes but if these companies went bust then they had creditors and these funds would go to them (subject to fees etc), depending on how long ago it happened of course. 

    You keep saying “solicitors” but you are talking about the trustee / liquidator, who happen to be a firm of solicitors. It’s the liquidators role to distribute these funds to the creditors (but, yes, it can be lucrative).
  • General_Applause
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    I may be totally wrong but as I see it, if they are asking for a signature, the pensions are still your dads and signing would mean you are giving up the pensions voluntarily. If it was compulsory, the pensions would be taken automatically.
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