News
Recovery of Overpayment of Social Security Benefits Following Discharge from Bankruptcy
December 1st 2007The Court of Appeal has upheld a High Court decision whereby an overpayment of income support was not recoverable following a discharge from bankruptcy.
The Secretary of State had appealed the High Court decision but this was dismissed in the recent Court of Appeal case.
The decision stated that the debt fell within the definition of “debt” as outlined in the Insolvency Act 1986 and the purpose of Section 281 of the Act is “in effect to wipe the slate clean” and “enable the bankrupt to make a fresh start”. Consequently the claimant was released from any liability to repay the overpayment as sought by the Secretary of State.
However, the Court of Appeal did make the following statement:
'If, as may well be the case, Parliament thinks that the inability of the Secretary of State to recover overpayments by deduction from prescribed benefits after the discharge of a bankrupt claimant is unacceptable, it is within its power to remedy the legislative loophole.'
last updated on 2nd January 2008