Employment, Cars and bankruptcy - Case Study Number 2

The Law

If you have not yet read the law set out in the Insolvency Act in respect of cars then follow this link.


Bill retired two years ago and he thought he was secure for the rest of his life. He rented his home, owned a new Jaguar car outright and had a pension of £13,000 per year.

Bill's wife Ann fell seriously ill just weeks after Bill retired. Ann then had two major operations and nursing home care before she died a month ago. To pay the costs Bill used up all of his savings of £12,000 and took out a loan for £20,000. Subsequently Bill found he could not keep up the repayments on the loan and petitioned for his own bankruptcy.


Will Bill be able to keep the Jaguar car in the bankruptcy or will the Official Receiver (O.R.) give some of the sale proceeds of the Jaguar back to Bill so that he can buy a smaller car?


Unfortunately bankruptcy law is not concerned with empathy only a consideration of the facts.

As Bill was not employed he did not need his car "for the purposes of his employment"

In consequence the Jaguar was sold by the O.R. and the entire proceeds were paid into the bankruptcy estate. No money was returned to Bill to enable him to buy a cheaper replacement car.

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