DRO revoked due to receiving life insurance

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oilyd
oilyd Posts: 14 Forumite
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in IVA & DRO
My mother in law has just lost her husband and Legal And General have decided to get her DRO revoked and they don't want to pay out the insurance on my recently deceased father in law who is not cremated yet? ANY HELP WOULD BE GREATLY RECEIVED:shocked:

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  • sourcrates
    sourcrates Posts: 28,878 Ambassador
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    Hi,


    Sorry for your loss.


    But your post makes no sense to me, only the insolvency service can revoke a DRO, no one else.


    The DRO can only be revoked if the insurance payout is over £1850, below that figure, its at the disgretion of the IS.


    If they don`t pay out, then the DRO remains unafected, i think some more detail may be appropriate here.
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  • fatbelly
    fatbelly Posts: 20,492 Forumite
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    edited 2 February 2019 at 6:22PM
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    Can you give us some more information?

    We understand that your mother-in-law is in the moratorium period of her DRO. Her husband has died. There was life insurance taken out with L&G.

    How much is due to be paid?

    Was it set up so that the lump sum will be paid into the husband's estate or direct to mother-in-law?

    Please note that L&G cannot decide to get her DRO revoked - only the insolvency service's DRP Team have the authority to do that.

    What do you mean when you say L&G don't want to pay out the insurance?

    Cross -posted with sourcrates - I believe that figure was raised but the latest version of the guidance notes is very delayed. I think it is £1990
  • oilyd
    oilyd Posts: 14 Forumite
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    edited 2 February 2019 at 6:24PM
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    Hi all the debt was just under 15k and the payout is £3000 it was as payed to mother in law, but i am not sure if it can be disinherited or refused then payed to the children. Thanks for all the help it is a very upsetting time and she is beside herself with grief and this just makes it worse. Just so were clear there is no will i can see or have knowledge of?. We have already payed the undertaker on her behalf as they wanted immediate payment before taking the body.
  • fatbelly
    fatbelly Posts: 20,492 Forumite
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    OK. If the sum was £3000 and paid direct to your mother-in-law (not as personal representative or executor) then unfortunately the DRO Team (typo earlier) must revoke the DRO. They will give 3 months notice 'in order to give time to make arrangements with your creditors'.

    However, the numbers are also unfortunate here as 3k is unlikely to be enough to clear the debts. It's obviously a rare combination of events and I can understand how your mother-in-law will feel. But she is protected from enforcement action until the DRO is actually revoked, most creditors don't enforce anyway, and if she qualified for a DRO, she will qualify for bankruptcy. It just has a higher fee (£680).

    The 3k will no doubt get used up in the funeral arrangements. I guess it is worth checking with L&G what options there may be but I suspect they have to follow the contract that was agreed.
  • maxmycardagain
    maxmycardagain Posts: 5,747 Forumite
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    so the IS were informed OF the insurance at the time of the DRO, L&G were duty bound to inform the IS of a potential payout (which L&G cannot wriggle out of) and the IS might snatch it?
    Now we all know how it felt to play in the band on the Titanic...
  • oilyd
    oilyd Posts: 14 Forumite
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    L&G have followed guidelines i get that but seems a bit harsh especially at this delicate time . they could have paid the director direct but like i said we had already paid them in advance as they would not take the body until done so. Thanks for all advice i will take this on board and relay to mother in law. I don't know if it can be assessed by OR as an individual case as only had 2 months left on DRO.
  • fatbelly
    fatbelly Posts: 20,492 Forumite
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    maxmycardagain wrote: »
    so the IS were informed OF the insurance at the time of the DRO, L&G were duty bound to inform the IS of a potential payout (which L&G cannot wriggle out of) and the IS might snatch it?

    The IS won't 'snatch it' in a DRO - but the DRO can be revoked.

    The 'duty to inform' may exist for an insurance company but doesn't seem to be always followed. However, in this case it clearly has been. In any case the debtor had a 'duty to inform'
  • oilyd
    oilyd Posts: 14 Forumite
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    Does that mean i can get her help as the payment was for funeral costs and the remaining if any to go to the son and daughter. The son payed out £1400 to funeral home on his credit card to be payed back when this payment from L&G was received is this a valid reason to argue the revoke of DRO as the money is for family not her.Just need to move forward with a plan of sorts.THANKS TO ALL
  • fatbelly
    fatbelly Posts: 20,492 Forumite
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    The devil is in the detail. You need to check what the L&G contract actually said. Your latest post makes it sound like it was a funeral plan in the husband's name. In that case it has no bearing on the DRO.

    It's only if it's insurance making a payment of £3000 direct to the person who has a DRO that it creates an immediate problem for the DRO.
  • oilyd
    oilyd Posts: 14 Forumite
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    Thanks very much for advice after seeing a CAB adviser an appointment has been made for a solicitor to resolve this issue and overturn the revoke. Mother in law has stopped crying and having panic attacks and no more talk about suicide.Big thumbs up to you all.
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