The Compendium

organisation doesn’t mind lending to a Bankrupt or, of course, some lenders might not even ask about financial status before releasing funds to them.

For example, could the additional debt leading to an action for a second Bankruptcy be for unpaid private school fees? Unpaid rent? Failure to repay a loan to a former friend? Or a payout required from a legal case, or a divorce?

If encountering this situation, the first thing to do is note the dates. Has a Bankruptcy Order in the second Bankruptcy been made before the discharge of the first Bankruptcy?

Where a subsequent Bankruptcy Order is made against the same individual any after-acquired property or money paid, and not distributed, under an Income Payments Order will become part of the second Bankruptcy.

The Insolvency Rules state that once the Trustee in Bankruptcy (Trustee) in the first Bankruptcy has received notice of the later Bankruptcy (eg presentation of a petition, or making of an application) any disposition of property after this date will be void, unless made with the consent of court.

Effectively, the Trustee in the first Bankruptcy must protect the assets of the insolvent estate for the second Bankruptcy. However, these assets are subject to a charge in favour of the earlier Trustee for any expenses of the first Bankruptcy for dealing with those assets. This means, the expenses of the Trustee must be paid first from any distributions to creditors in the second Bankruptcy.

Any after-acquired property and money already received and not distributed from an Income Payments Order (IPO) will belong to the second Bankruptcy. All afteracquired property and income to be paid after the commencement of the second Bankruptcy will belong to the second Bankruptcy.

All other assets that were vested in the first Bankruptcy will remain in the first Bankruptcy. Essentially this means that the only assets in the second Bankruptcy will be the remaining payments under the IPO, any after-acquired property or any assets obtained since the commencement of the first Bankruptcy.

Warning: a second Bankruptcy may not be the most lucrative case to take and most will be administered by the Official Receiver.

[See ‘Bankruptcy’, ‘Bankruptcy Order’, ‘Trustee in Bankruptcy’, ‘Income Payments Order’, ‘IPO’, ‘Official Receiver’ and ‘Discharge’.]