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| lauren.2 |
Posted - 26 November 2009 : 13:43:19
I owe money to the council for overpayment of housing benefit and to the social for overpayment of income support would these debts be included if I petitioned for bankruptcy? |
| 6 L A T E S T R E P L I E S (Newest First) |
| chester2005 |
Posted - 27 November 2009 : 01:48:34
ditto debt info i have cut and pasted it for my records
Dave
Don't worry or know that worrying is as effective as trying to solve an algebra equation by chewing bubble gum.(Baz Lurman)
RevivaUK helped me through it all i can't recommend them enough!! |
| Richard P |
Posted - 26 November 2009 : 23:32:50
gold star debt info ... well researched and found
Richard |
| debtinfo |
Posted - 26 November 2009 : 22:05:03
Im afraid they have a special status laid down by a court case
have a read of this section of the OR's technical manual
40.102 Overpayment of state benefits
Overpayment of state benefit may be made as a result of mistakes, change of circumstances or fraud. Where overpayments are made, the authority which made the overpayment has the right to recover the overpayment, for example:
Housing benefit - Overpayments of housing benefit may be recovered [Note 7] and the overpayment can be recovered by deductions from ongoing housing benefit entitlement [Note 8] although there is a limit on the amount that may be so recovered.
Jobseekers allowance - Overpayment of income based jobseeker's allowance may be recovered [Note 9] by deduction from prescribed benefits including incapacity benefit [Note 10]. There is a limit on how much can be recovered by this method.
Tax credits - Overpayment of tax credit may be recovered from any award of tax credits payable to the person upon whom the notice of overpayment was served [Note 11] or by direct collection where there is no ongoing award of tax credits or where the ongoing award has ceased.
40.102A Categorisation of overpayments of state benefits
In the case of R. (on the application of Steele) v Birmingham City Council [Note 12] the court categorised the steps leading to recovery of overpayments in relation to the bankruptcy order date, in to three steps; when the award was made; when it was paid; and when the determination on recovery of the overpayment was made.
This resulted in the court further categorising overpayments in to 4 types as follows:
Category 1 - The benefits are awarded and paid to the claimant before the date of the bankruptcy order. The decision that the overpayments are recoverable is also issued before the bankruptcy order date.
Category 2 - The benefits are awarded and paid to the claimant before the date of the bankruptcy order. The decision that the overpayments are recoverable is issued after the bankruptcy order date.
Category 3 - The benefits are awarded to the claimant before the date of the bankruptcy order. The benefits are paid to the claimant after the date of the bankruptcy order. The decision that the overpayments are recoverable is issued after the bankruptcy order date.
Category 4 - The benefits are awarded and paid to the claimant after the date of the bankruptcy order. The decision that the overpayments are recoverable is also issued after the bankruptcy order date.
40.102B Recovery of overpayments of state benefits
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 [Note 12] which was subject to an appeal by the Secretary of State [Note 13] 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 State [Note 14] 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 [Note 15]. The benefit provider may, however, continue to make deductions from ongoing benefits until the date of discharge [Note 16].
40.102C Summary of the treatment of overpayments of state benefits
The following table provides a quick reference table for dealing with overpayments of state benefits in relation to the making of the bankruptcy order (“BO”):
Category
Award made
Award paid
Recovery decision
Treatment by official receiver
1
Before BO
Before BO
Before BO
Provable debt, recovery can continue until debt released upon discharge*
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
*If the category 1 overpayment arose as a result of fraud the debt is provable in the bankruptcy proceedings but would survive discharge and the debt would still be enforceable against the bankrupt [Note 15].
40.102D Category 1 – treatment of tax credit overpayments
In relation to the recovery of overpaid tax credits falling within category 1 (see paragraph 40.102A), where the final award notice (for repayment) was issued before the date of the bankruptcy order, HM Revenue and Customs (HMRC) state that they will adhere to the following policy:
Where recovery of the overpaid tax credits was intended to be taken via direct collection rather than from ongoing awards HMRC will submit a proof of debt in the bankruptcy.
Where recovery of the overpaid tax credits was intended to be taken via ongoing awards, HMRC will continue collection until discharge; no proof of debt will be submitted in the bankruptcy and the balance of the debt will be written off upon discharge.
Should the official receiver be approached by a bankrupt, who objects to the recovery of overpayments by HMRC after the bankruptcy order date, they should be referred to HMRC without further comment by the official receiver.
HMRC will claim set-off in respect of monies it owes to the bankrupt if available [Note 17]. HMRC will also pursue the non-bankrupt claimant where tax credits have been claimed jointly. Where the intended recovery is via direct collection HMRC will also submit a proof of debt in the bankruptcy, but will not recover more that 100p in the £ of its debt; Where the intended recovery is via ongoing awards to the joint claimant, recovery will continue but a proof of debt will not be submitted.
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| chester2005 |
Posted - 26 November 2009 : 21:29:35
once declared BR no creditor can take anything from you .. they cannot deduct from your benefits once declared BR your financial affairs lie with the OR and it would be seen as preferential treatment
Dave
Don't worry or know that worrying is as effective as trying to solve an algebra equation by chewing bubble gum.(Baz Lurman)
RevivaUK helped me through it all i can't recommend them enough!! |
| debtinfo |
Posted - 26 November 2009 : 21:08:18
Hi if you have received a final notice that you owe this money (basically a total asking you to repay) then it will be a proveable debt in the bankruptcy. However they may still recover their money in one way only and that is by making deductions from further benefits up until the time that you are discharged from the bankruptcy |
| Housing |
Posted - 26 November 2009 : 17:27:20
Hi Lauren 2,
Welcome to this forum
I believe you can include this, but provided the Council have not obtained a "liability Order" against you.
I am sure an expert will give a more detailed reply.
Good luck, Richard
"There are no problems - only solutions..." |
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