Other enforcement measures - bankruptcy only

April 2004

13.84 Suspension of discharge

(Amended October 2010)

An uncooperative bankrupt should be informed by letter that the official receiver can apply to the court at any time to suspend the date of his/her automatic discharge. A warning of the possible extension of the duration of bankruptcy may prove an effective means of securing co-operation. It should be noted that such an application can only be made where a bankrupt has failed to comply with his/her obligations within the proceedings under Part IX of the Act. The court may order an extension of the period of the bankruptcy for so long as it thinks fit, or until the fulfilment of conditions specified in the court order. The official receiver should ask for the suspension to apply until such time as the official receiver is of the opinion that the bankrupt has complied with his/her obligations under section(s) 288 and/or 291, (as evidenced by a report filed by the official receiver).

See also Part 12.

Notes: [s279(3) and r6.215(2)] [s288 and s291]

Where a public examination is adjourned, in non-surrender cases or those where there is a lack of co-operation (for example a refusal to answer questions, or a failure to submit accounts), an application to suspend the discharge may be made at the hearing of the public examination (in pre 6 April 2010 petition cases the suspension of discharge application can only be made if the PE has been adjourned generally).

Notes: [r6.176(4) as amended by the Insolvency (Amendment) Rules 2010]


13.85 New power of trustee to suspend discharge

The EA2002 section 256 amends section 279 of the Insolvency Act 1986 and after 01 April 2004 a trustee other than the official receiver also has the power to make an application to the court for the suspension of a bankrupt's discharge.

Note: [s279(3)]


13.86 Shorter discharge period under EA2002

Note: [s279(3)]

If an application to suspend the bankrupt's discharge is likely to be necessary, the process should be started as soon as it is apparent that the bankrupt is not co-operating, as the official receiver has a significantly shorter period in which to enforce co-operation post EA2002. After 01 April 2004, all pre-commencement first time bankrupts not subject to an existing order under section 279(3) will be discharged on 31 March 2005 at the latest. All bankrupts against whom proceedings are commenced after 01 April 2004 will be discharged twelve months after the making of the order unless a bankruptcy restrictions order is made.

It is recommended that the application should be made for the bankrupt's discharge to be suspended if the bankrupt has not surrendered to the proceedings after 42 days from the making of the bankruptcy order. Also see Chapter 22 Part 1 - Discharge from bankruptcy.

Notes: [EA2002 Schedule 19 paragraph 4(1)(a)]


13.87 Suspension of discharge existing at commencement date of EA2002

Note: [s279(3)]

Where a bankrupt is subject to an order under s279 suspending the running time of his/her discharge at 01 April 2004, that order will continue to have effect. Where the bankrupt subsequently co-operates and obtains a lifting of the suspension, then, if the lifting of that suspension is obtained by 31 March 2005, the bankrupt will benefit from the provisions of EA2002 schedule 19 paragraph (4)(1)(a) and will be discharged by or on 31 March 2005.

If the bankrupt does not co-operate and obtain a lifting of the suspending period prior to 31 March 2005, he/she will not benefit from the provisions of EA2002 schedule 19 paragraph 4(1) and if the order suspending his/her discharge is subsequently lifted will be discharged from bankruptcy at the end of the period specified in s279(1)(b).

Notes: [EA2002 Schedule 19 paragraphs 4(1), (2) and (3)] [s279(1)(b)]

Full details of the procedures relating to suspension of discharge are contained in Chapter 22 Part 1 - Discharge from bankruptcy.


13.88 Re-direction of bankrupt’s mail

Note: [s371]

Where appropriate, and particularly in cases of total failure to surrender to the proceedings, the official receiver or trustee may consider applying to the court for an order re-directing post addressed to the bankrupt at his/her last known residential and/or business address(es) and any other address at which he/she is known (but not merely suspected) to be receiving post.

It is becoming increasingly difficult to obtain orders under section 371 due to the implications of the Human Rights Act 1998 schedule 1 article 8.Re-directing a bankrupt's mail constitutes a contravention of HRA98 schedule 1 article 8 (respect for private and family life, home and correspondence). This contravention may be justified under article 8(2) as it is in accordance with the law and with the legitimate aim of protecting the rights of creditors, depending on the individual circumstances of the case.

Note: HRA98 schedule 1 article 8 and 8(2)]

However, interference with confidential correspondence between the bankrupt and his/her legal advisors is not justified under article 8(2), as it is not a proportionate measure to adopt (Foxley v United Kingdom [2000] BPIR 1009). See also paragraph 13.93


13.89 Form of application

The application for a re-direction order may be made with or without notice being served on any other party , and can be made to the High Court or the County Court. It is usual for the application to be made without notice as it is arguable that giving notice might lead to the bankrupt taking steps to reorganise his/her affairs during the time it takes for the order to be obtained which will operate to the detriment of the official receiver and the bankruptcy estate. The official receiver should make any application for a re-direction order without notice to the bankrupt or any other person unless the court directs otherwise.

In Singh v Official Receiver [1997] BPIR 530 the court stated that applications to court for a re-direction order ought to be supported by details of the bankrupt's non co-operation. Any application for a re-direction order should include a report prepared by the official receiver in accordance with rule 6.235A(3) (as amended by the Insolvency (Amendment) Rules 2010).The report enables the official receiver to explain in some detail to the court why the re-direction order is being sought. The form can be expanded to contain any further information that may assist the court in making an order.

The court may impose such conditions as it sees fit on the operation of the order. For example, the court may direct that the mail should be re-directed to and opened by a specified third party (such as a solicitor), and also direct how the costs of this will be paid.

If the bankrupt later seeks a review or rescission of the re-direction order made by the court, the report can be disclosed to him/her and will provide the bankrupt with an opportunity to see the case made against him/her in seeking the order.

Notes: [r6.235A as amended by the Insolvency (Amendment) Rules 2010] [s373] [r6.235A(2)] [REDAO] [r6.235A(5)]

A copy of the re-direction order and current re-direction fee should be sent to the postal operator for the postcode area concerned.

Note: [form REDLPO/B53.02] [Form REDAO/6.80] [r6.235A(6)]

The re-direction order by the court must specify the persons on whom it is to be served. A copy of the re-direction order need not be served on the bankrupt unless the court directs otherwise.


13.90 Period of order

Note: [s371(2)]

A re-direction order will allow the bankrupt’s post to be re-directed for a period not exceeding three months. A decision must be made in sufficient time before an order is due to expire as to whether or not application should be made for any further order. The official receiver must not open or retain any mail re-directed in error by the postal operator after the expiry of the order.


13.91 Action after re-direction order obtained

It has become practice in official receiver's offices to open and photocopy all mail addressed to the bankrupt that has been re-directed by the postal operator. Only mail that directly relates to the bankrupt's financial position or estate should be copied and retained.

Post that is addressed to someone other than the bankrupt, or post which might be covered by legal professional privilege (for example letters with a solicitor's details on the envelope), or post that is of a personal nature to the bankrupt (for example letters from a hospital) should not be opened (see paragraphs 13.92 to 13.94). If such correspondence is opened in error, it must not be photocopied. All correspondence which meets the above criteria should immediately be passed to the bankrupt, or forwarded to the correct addressee.

Where the official receiver writes to a bankrupt after a section 371 order has taken effect, all letters sent by the official receiver to the bankrupt must be endorsed "To be delivered as addressed if possible. Not to be re-directed by the postal operator ". Where an insolvency practitioner is subsequently appointed, details of the re-direction order must be noted in the report to the trustee contained in the record book. As the order will provide for re-direction to the official receiver, it is better that the bankrupt’s mail should continue to be so re-directed until the order expires. If practical difficulties are encountered, an application can be made for the order to be varied so that the post may be re-directed to the trustee. Mail received under the re-direction order following the appointment of a trustee should only be forwarded to the trustee where it relates to the possible realisation of assets. Items addressed to someone other than the bankrupt, or which might be covered by legal professional privilege, or that is of a personal nature to the bankrupt should not be forwarded to the trustee. The trustee should be asked to inform the official receiver if a further order is obtained so that the official receiver can ensure any letter he/she sends to the bankrupt may be endorsed as above. If the official receiver obtains a re-direction order after the trustee’s appointment, he/she should notify the trustee in writing of the order.


13.92 Only post of bankrupt to be re-directed

Care must be taken to ensure that addresses can be positively linked to the bankrupt and are not confused with a third party with the same or a similar name. Where a number of family members with similar names reside at the same address, great care should be taken to provide as much detail as possible to the postal operator to ensure that the correct mail is re-directed. In cases where there are two individuals with very similar names consideration should be given to pursuing other courses of action to enforce co-operation. The official receiver must ensure that only post addressed to the person described in the court order is re-directed to the official receiver and notify the postal operator immediately in the event of any irregularity. Any post incorrectly delivered to the official receiver must be sent immediately to the correct addressee with an endorsement that the letter should be delivered as addressed or, alternatively, sent to the postal operator with a reminder as to the terms of the court order. Under no circumstances should post addressed to anyone other than the bankrupt be opened or photocopied by the official receiver.

Where the official receiver continually receives mail intended for a third party, despite informing the postal operator, the official receiver should consider requesting the postal operator to cease the re-direction.


13.93 Confidential correspondence with legal advisors Note: [s371]

In Foxley v United Kingdom [2000] BPIR 1009 it was held by the European Court of Human Rights that a re-direction order under section 371 does not in itself breach HRA98 schedule 1 article 8 provided its terms are strictly observed and it is not used in a disproportionate manner. Interference with confidential correspondence between the bankrupt and his/her legal advisors cannot be justified as it is not a proportionate measure to adopt. If a letter is clearly from a solicitor or the Legal Services Commission, it should not be opened and should be promptly forwarded to the bankrupt. Where post is opened which is subsequently found to contain privileged correspondence with a legal advisor, it should be resealed and immediately passed to the bankrupt without being copied by the official receiver.

Notes: [HRA98 sch1 art 8]


13.94 Personal correspondence

Where it is clear that an item is of a personal nature it should be forwarded to the bankrupt without delay and without being copied. A bankrupt should not be required to attend the office in order to collect his/her mail, although he/she can do so if they wish to.


13.95 Costs of re-direction order

Mail re-directed under an order of the court is not exempt from charges made under Postal Regulations. The case administration fee does not include the cost of obtaining the re-direction order which must be separately charged against the estate.


13.96 Re-direction in a liquidation

It should be noted that the post of a company in liquidation is re-directed as a matter of course and that no application to court is required.


13.97 Enforcement of income payment orders and income payment agreements

Income payment orders and income payment agreements (IPOs and IPAs) are covered in more detail in Chapter 31 Part 7 - Realisation of assets. This chapter only covers enforcement of IPOs and IPAs.

In the majority of cases, once an order for an IPO or an IPA has been made, the papers will be passed to the appropriate Regional Trustee and Liquidator Unit (RTLU). The RTLU will deal with enforcement issues arising from cases sent to them and where applications to the originating court must be made the RTLU will prepare and serve all the paperwork , but may require the local office to undertake the hearing.

Where a bankrupt has failed to make agreed payments, the official receiver, if trustee, should first attempt to determine why the payments have ceased. If this is for a valid reason, the official receiver might decide to take no further enforcement action.


13.98 Attachment of earnings

Where there is no valid reason for non-payment, the official receiver can apply for the order or agreement to be varied and served on the bankrupt's employer. This can be done pre or post discharge. Full details of the bankrupt's employer should be obtained at the initial stages of the IPO or IPA process.

Notes: [s310(3)(b)]


13.99 Suspension of discharge for non payment of an IPO or IPA

Where the bankrupt has not been discharged, the official receiver can apply for an order to suspend the bankrupt's discharge if he/she has failed to make payments under an IPO or an IPA without a valid reason. Where a bankrupt has obtained his/her discharge and then defaults on payments without a valid reason, the only method of enforcement is for the order or agreement to be varied and served on his/her employer. Ceasing to make payments under an IPO or an IPA is unlikely to be sufficient grounds for a bankruptcy restrictions order to be made if this is the only matter of misconduct.

Note: [s279(3)]


13.100 Bankrupt self-employed and discharged

Where an individual is self employed and has obtained his/her discharge, there are no real means of enforcement if the individual ceases to make payments under an IPO or an IPA without valid reason. Although the official receiver might consider making an application under section 363 or section 366 in such a case he/she should consider the costs of such an application and the likelihood of recovering monies for the estate (see paragraph 13.101 also).


13.101 Post discharge enforcement generally

Where a bankrupt has obtained his/her discharge from bankruptcy and subsequently fails to co-operate with the official receiver as trustee of his/her estate, the official receiver should take all action possible to obtain the information needed from alternative sources. Where there is no alternative, in exceptional circumstances the official receiver may consider making applications under section 363 or section 366 to enforce the co-operation of a discharged bankrupt. The power to direct the bankrupt to attend for private examination survives discharge (Oakes v Simms [1997] BPIR 499), see also Part 5. However, to justify such an action, it is expected that the loss to the estate as a result of the non co-operation would need to be substantial.

Notes: [s363(2), s366(1)]


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