A High Court judge has ruled that the untouched pensions of a man in bankruptcy could not be accessed in order to pay off his creditors.

That is in direct contradiction to a ruling by another High Court judge in 2012.

This case involved a man who had three personal pension policies, one of which held a considerable sum. The trustee in bankruptcy applied for an Income Payments Order (IPO) in order to pay off the man’s creditors.

However, the judge ruled that the funds held in the pensions could not be used, as they had not yet matured and the man was not yet entitled to them.

The decision was the exact opposite of one made in a similar case in 2012.

The judge accepted that his ruling could be considered confusing, but insisted the Court of Appeal would need to make a final ruling on whether his approach, or the one made in 2012, was correct with regards to accessing untouched pensions in order to pay creditors.

One key point to consider is whether or not the pensions have yet been crystallised (accessed). If they have, then they can be included as part of the bankrupt person’s income, whereas they cannot if they are still uncrystallised.

The issue centres on the interpretation of section 310 of the 1986 Insolvency Act. The case will be decided by the Court of Appeal. We will keep clients informed of any developments.

Please contact us if you would like information or advice about debt management and credit control.