When a person goes bust, what is the position regarding a debt they owe to the Child Support Agency (CSA) with regard to arrears of maintenance payments? This question arose recently when a man applied for a creditors’ voluntary arrangement (CVA). At the time the application was made, he owed the CSA more than £25,000 in respect of child support payments due to be paid for the benefit of his children.
The CSA ignored the notice inviting it to attend the hearing relating to the CVA as it did not consider it was a creditor that could be bound by the decision under insolvency law. The case reached the Court of Appeal, which agreed with the CSA.
Where a person is in financial difficulties and owes money to the CSA, the CSA retains the right to pursue the sums owed to it whether or not the person seeks a formal or informal arrangement with other creditors.
A CVA is not the answer to clearing a fathers liability to the CSA, but it is effective and is succesfully used in dealing with consumer and personal business debt. Where possible individuals should seek early advice and explore all possibilities before it is too late
says Kam Majevadia, Insolvency Partner at Sydney Mitchell Solicitors.
For more information on this article or any insolvency issues please contact Sydney Mitchell on 0808 166 8827 or fill in our on-line enquiry form.
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