Bankruptcy and the family car - Case Study Number 3

 

If you have not yet read the law set out in section 283 of the Insolvency Act then click here before considering this case study.

 

Background

David is married to Clare. Clare is a hard worker earning good money while David flits in and out of jobs. Clare bought a car for David's use, a year old Mondeo, out of her own earnings. The car is registered in Clare's name.

During Davids latest period of unemployment he gambled away (unknown to Clare) their joint savings and incurred credit card and loan debts of £20,000.

A creditor made David bankrupt two weeks ago.

 

Question

Can the Official Receiver (O.R.) sell the Mondeo and retain all the proceeds?

 

Answer

The O.R. cannot sell the car used by David even though the car is not needed as David is unemployed.

The reason for this is that the car belongs to Clare and is therefore an asset which is kept outside of David's bankruptcy.

 

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