As a bankrupt, any kind of windfall you receive (such as an inheritance), must be paid into the bankruptcy. However there may be situations where you can benefit from at least some of the money you receive.
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- Will I be able to keep any of my windfall?
- Could a Windfall end my Bankruptcy early?
- Windfall after Bankruptcy?
- Always speak to your Official Receiver
Do you want help to go bankrupt? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts
Will I be able to keep any of my windfall?
Unfortunately, usually not. Any windfalls received while you are bankrupt normally have to be paid to the Official Receiver (OR), who will distribute this to your creditors.
For this reason it is extremely important that you report any windfall immediately to the OR. Although it might be tempting make sure you do not spend any of it until you have spoken to them.
If you have a particular emergency relating to your health or your home, you might feel it is reasonable to keep some of the windfall. You can ask your OR to consider this. However there is no guarantee they will agree to it.
Under section 333 of the Insolvency Act 1986 you must tell the Official Receiver of any windfall you receive within 21 days from the date you become aware of it.
Could a Windfall end my Bankruptcy early?
Possibly, yes. If the amount you receive is sufficient to pay the total outstanding balance of your original debts.
However on top of the original debts you will also have to pay the OR’s costs (which are likely to be around £10,000). In addition you will be charged interest at 8% per year on the debt from the start date of your bankruptcy.
If the windfall is large enough to cover all of this then any remaining balance will be returned to you. You may then be discharged immediately from your bankruptcy.
If your windfall is less than the debts you owe plus costs and interest your bankruptcy will continue for its full term.
Windfall after Bankruptcy?
Most windfalls you receive after you have been discharged from bankruptcy will be yours to keep. However in some circumstances you will still have to pay the money to the OR.
This is the case if the windfall is a result of something that happened before or during your Bankruptcy (i.e. an ‘after acquired asset’).
Good examples of this include inheritance received as a result of someone dying while you were bankrupt. In addition compensation claims for things that happened before you went bankrupt such as PPI and personal injury claims.
After you are discharged from bankruptcy you may still be paying an IPA. If you receive a bonus payment or earn overtime during an IPA you must report this to the OR. You will have to hand this extra cash to them in addition to your normal payment.
Always speak to your official receiver
As a bankrupt if you find out you are receiving a windfall you must tell the official receiver ASAP.
Unless the amount you receive is more that the total debt that you owed before you were declared bankrupt plus costs and interest there is very little chance that you will be able to keep any of the money you receive.
If you have unaffordable debts and are due to receive a windfall – contact us to discuss your options (0800 077 6180). Going bankrupt may mean you would lose this money.
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