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Bankrupts Are Entitled to Know Their Date of Discharge – High Court Ruling

As a matter of policy, bankrupts should be able to tell with some precision when their discharge should take place so that they can move on and rebuild their financial lives. The High Court resoundingly made that point in upholding a debtor’s challenge to a judge’s order that suspended her discharge indefinitely.

The woman was declared bankrupt after her business failed. She would ordinarily have been discharged a year later but her trustee in bankruptcy complained that she had not fully answered a number of questions concerning her financial position. In those circumstances, the judge granted an order under Section 279 of the Insolvency Act 1986, suspending her discharge until such time as the trustee was able to report that she had complied with her disclosure obligations in full.

In overturning that order, the Court found that the suspension granted was in effect indefinite and to a large extent left the woman at the trustee’s mercy. The terms of the order gave the trustee no real incentive to pursue her inquiries diligently or expeditiously and, in practice, she would be able to prevent the woman’s discharge until convinced that all her questions had been satisfactorily answered.

The woman had gone to considerable lengths to provide the information requested of her and, although her answers were not entirely complete, there was no evidence that she had been deliberately obstructive or misleading. The case was very much at the lower end of seriousness. The Court heard further submissions as to the appropriate way forward.

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