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HMRC internal manual

Debt Management and Banking Manual

Enforcement action: county court proceedings: Third Party Debt Orders (TPDOs): effects of insolvency on a TPDO

Action on learning of insolvency

When you learn of a defendant’s insolvency,

  • contact the court and
  • suspend the TPDO.

The Insolvency Act 1986

The Insolvency Act 1986 states that where a creditor has begun an execution process before the commencement of bankruptcy but has failed to complete before that date the creditor may not proceed and any proceeds after the date of bankruptcy must be handed over to the trustees.

Note that repayment must not be made to the defendant.

Definition of completion

In a TPDO case “completion” is defined as receipt of the debt (payment).

Payment received before petition for bankruptcy filed

A payment received by HMRC before the date of the petition is not affected and should be retained.