Civil way: 4 November 2016

LAUGHING BANKRUPT

An income payments order or undertaking with a life of up to three years under s 310 of the Insolvency Act 1986 is one of those irritations which the bankrupt will tolerate. It’s a device to provide a few crumbs to the creditors but it must never reduce the bankrupt’s income below that necessary to meet the reasonable domestic needs of themselves and their family. The official receiver or trustee will not be stirred into even thinking about seeking payments unless the bankrupt has at least a spare £20 per month.

The post-29 May 2002 bankrupt will generally preserve their pension. However, Raithatha v Williamson [2012] EWHC 909 (Ch) decided that a bankrupt could effectively be compelled to draw down for the purpose of servicing an income payments order. That decision has just been rubbished by the Court of Appel in Horton v Henry [2016] EWCA Civ 989. It would drive a coach and horses through the legislative protection afforded