Historic bankruptcy- creditors 20+ years on

[Jellicalcats]

Posted on thee money matters chat as well in the hope someone can advise on this.

My in laws had to file for bankruptcy around 2002. They were discharged (and have the certificate) but due to the circumstances of the causes of the bankruptcy they have since been rewarded government compensation.

They have received around 23% of this but the remainder is being held by the official receiver who has told them that the original creditors have been contacted to see if they want to “waive their right to their claim”.

We’re confused by this and the OR has been less than helpful in explaining why the creditors still have a claim after discharge (it’s not car loans or mortgages etc).

I was a creditor in a bankruptcy case and after a year I have no legal claim anymore.

Can anyone explain why creditors may be able to still claim all these years later and whether the payment to them would be passive (they receive it unless they say they don’t want to claim) or active (they have to actively claim it).

The OR contacted creditors in July and the majority still haven’t responded. He’s indicated he would pay out eventually to all unless they say they don’t want to claim.

I don't know about the passive or active bit but I get that if the bankruptsy wasn't their fault and they have received compensation from whomever caused them to be bankrupt, they some of that compensation should be returned to the people who lost money. Its the principle of righting a wrong and returning people involved to the circumstances they would have been in had they never been put into the sxituation in the first place. So if your inlaws hadn't been put into the position where they had to declare bankruptsy, they would have paid their creditors. The way to know how long they will have to wait, is to ask the OR.

Is this a Post Office Horizon case?

@godmum56 thanks, yeah this would make sense.

The Official Receiver had been very unhelpful and won’t chase the creditors or answer direct questions. My in laws are elderly and very stressed by the situation so I plan to arrange a call with them and the OR in the new year to straighten out what’s happening and lay down some timelines.

In the meantime if anyone can advise about the passive or active question that would be really helpful.

You state that your in-laws have been compensated for something that happened prior to their bankruptcy. If I've understood that correctly, then the OR would usually treat this money as an asset which they became entitled to prior to to their discharge from bankruptcy, so it forms part of the bankrupt's estate. AFAIK there is no time limit on the OR's right to claim and distribute such assets amongst the creditors. The OR will do this unless the creditors state that they don't want it.

NB: I am not legally trained, and I'm sure someone will correct me if I am wrong.

I presume creditors have been contacted due to the money is from the time period that the bankruptcy covered. Is the Trustee still around that dealt with the original bankruptcy, if they are I would contact them. I worked for an Insolvency Practitioner and it’s not unusual that getting replies from 20 years ago takes a long time, for different reasons.