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Legal Aid debt and bankruptcy
A question for all the debt experts out there.
My client has a £17000 debt to Legal Aid. I don’t have many details as yet but it seems that he had Legal Aid funding he wasn’t entitled to, because he did not declare that he owned a property at the time of the application, and this was subsequently discovered and he has been asked to pay it back. He also has substantial other debts and is considering bankruptcy.
My question is will the bankruptcy clear the Legal Aid debt once he is discharged? Will he have any problems with the bankruptcy due to the fact that he originally apparently got the Legal Aid funding fraudulently?
Thanks all
Debts incurred through fraud are not cleared by bankruptcy. When someone goes bankrupt, The Official Receiver looks into the debtors financial affairs and will decide whether any of their conduct has been ‘unfit’ and they can then decide to place a restriction order upon the debtor for up to 15 years which has a number of implications.
National Debtline has a good bankruptcy leaflet on their website as do the Insolvency Service.
I agree with Lauren that debts incurred through fraud are not written off in bankruptcy. However, it might be asked whether this is fraud, if - as I assume is the case - there has been no criminal prosecution & conviction.
Look at this thread, particularly my post of 16.3.12 where I give the advice I received in an adpen case. Your client’s situation could be analogous - i.e. the legal aid authority could take him to a civil Court even if they decided not to prosecute. Personally, I wouldn’t hold out much hope of him getting away with it!