Tax Credits & Bankrupt

[Chris1918]

Are tax credit overpayments written off when you are bankrupt.
Does the classification matter.
ie Judgement for overpayment , demand for overpayment but no enforcement , overpayment identified but not collected pending review.
We have all three types totalling over 8k

[pink-kittens]

Why not ask your receiver?

[Info Bank]

Cant Give a Better Recponce Than That.

[themas]

I've known of a case where the Official Receiver got this wrong!

If the overpayment relates to a tax year which has ended, and for which the tax credit award has been finalised (i.e. the renewal has been done & an award notice stated to be final has been issued), then the overpayment is a debt in the bankruptcy. However:

1. If the tax credit claim was a joint one (husband & wife etc.) & only one of the claimants is bankrupt then collection of the debt will continue against the non-bankrupt party.

2. If the bankrupt is the sole claimant & is still getting tax credits then deductions to recover the debt will continue throughout the bankruptcy but the remainder will be written off when discharge from bankruptcy takes place. If entitlement to tax credits has ended, then none of the debt is payable by the bankrupt.

3. Any overpayment not covered by the 2nd para. above is not a bankruptcy debt & will still be payable.

4. If you are still getting tax credits you need to notify the Tax Credit people of the bankruptcy (send a recorded delivery letter & a copy of the Court order); also notify them in the same way of the discharge when it occurs & request them to write off the debt if you are the sole claimant.


These rules apply whether judgement has been obtained or not & whether a review is pending or not.