Payments received BEFORE BR - Advice for me please!?!

Wildr

Hello all,

Apologies if this is covered elsewhere, I have tried to search without success tho'

I have been advised by CCCS that the solution to my issues is to petition for Bankruptcy - I have received documents and I'm trying to sort finances to go forwards with it.

in the meantime, I have received a cheque from a solicitor who has been acting for me in a work related injuries claim for about £8,500 (my debts are massively more than this due to issues with the CSA, which is a whole other story!).

I owe 95% of this to my mother-in-law for financial support and assistance whilst I was house bound following the accident.

My question is (at last I hear you cry!);

If I pay this into my bank account and then either transfer the money to my Mother-In-Law, or draw it as cash to pay her now, will the OR look to claim that money back from her as part of the Bankruptcy agreement if the bankruptcy is agreed.

To clarify I have not yet even filled in the petition or organised an appointment to file the petition.

I really do not want my Mother-In-Law out of pocket due to my financial circumstances, particularly given how supportive she has been throughout my time injured!

Any/all help gratefully received!

R.

blind-as-a-bat_2

If the OR saw her as a creditor and felt you had given her preferential treatmant by paying it then yes they may try to claim it back im afraid

peachyprice

Hi Wildr,

Some claim compensation cannot be taken by the OR in BR, the insolvency service helpline might be able to clarify where you stand with this.

However, if it is exempt and you can keep it I would wait until you've had your interview before paying your mother-in-law back

HTH

JPS29

You have a PM;)

Wildr

Thank you all for your advice - you've clarified what I had feared.

I've spoken with CCCS bankruptcy section regarding this now and they also confirmed that whether the payment is for damages or care, it matters not and it would have to form part of the 'assets' that the OR would look at.

Thanks again.

DelhiBelly_2

If you are already bankrupt and receive compensation for a personal injury then this money would not be classed as an asset and would not be taken by the OR so it is interesting to know what would happen to money received prior to bankruptcy. I have taken the liberty of sending a general e-mail (nothing on there to identify anybody, other than me ) to the IS to see what they think and I'll send you a PM with the reply when I receive it (might take a couple of days). I would agree with Peachy that if the money is exempt you should not pay it to you MIL until after your OR interview or maybe after discharge if you want to be really safe

fermi

Hmmm.......

31.9.15 Timing of awards and payment of damages in "hybrid cases"

Counsel’s advice has been obtained regarding the claiming of damages according to the timing of the award and the subsequent payment of the resulting damages.

Where an award is made and paid prior to the making of the bankruptcy order, by virtue of section 283 any funds remaining in the possession of the bankrupt at the date of the bankruptcy order form part of the estate, section 436 defining "property" vesting as including money. Similarly any assets purchased with the money vest in the trustee. An exception to this is considered to be where damages have been awarded in respect of funding for future medical care; such damages, even if being made by periodic payments, should generally be left with the bankrupt.

Where an award is made before the bankruptcy order but paid after it, it is considered that the court order awarding the damages is an asset in the bankruptcy and the damages awarded will be split according to the decision in Ord v Upton i.e. that personal damages (including an award for future care costs) vest in the trustee but are held on constructive trust for the bankrupt. Any property damages, including awards in respect of past and future earnings, vest in the trustee.

In the event that a claim existed before the making of the bankruptcy order, but the award was made after it, the award in respect of the personal element vests in the trustee but is held on constructive trust for the bankrupt.

Technically, a hybrid claim arising after the making of the bankruptcy order may be able to be claimed by the trustee as after-acquired property. However, funding problems would then result and generally the claim should be left with the bankrupt for him to pursue. Damages, other than personal damages, may then be able to be claimed as after-acquired property.

maxmycardagain

not so sure about that DB, the OR could eye it up greedily

peachyprice

From Fermi's post above it seems that timing is everything

DelhiBelly_2

Methinks you are right Max. I know that life ain't fair but it seems a bit cr***y that some people would lose it and others wouldn't just based on when they receive it.

banksshouldworry

Another option is to contest the award of £8500 so that it remains in debate until after your BR and discharge. Can the solicitor knock it around for a bit longer so the check comes through after discharge?

Just a thought