Insolvency Act 1986, section 251I

Discharge from qualifying debts

Part 7A Debt relief orders

(1)Subject as follows, at the end of the moratorium applicable to a debt relief order the debtor is discharged from all the qualifying debts specified in the order (including all interest, penalties and other sums which may have become payable in relation to those debts since the application date).

(2)Subsection (1) does not apply if the moratorium terminates early.

(3)Subsection (1) does not apply in relation to any qualifying debt which the debtor incurred in respect of any fraud or fraudulent breach of trust to which the debtor was a party.

(4)The discharge of the debtor under subsection (1) does not release any other person from—

(a)any liability (whether as partner or co-trustee of the debtor or otherwise) from which the debtor is released by the discharge; or

(b)any liability as surety for the debtor or as a person in the nature of such a surety.

(5)If the order is revoked by the court under section 251M after the end of the moratorium period, the qualifying debts specified in the order shall (so far as practicable) be treated as though subsection (1) had never applied to them.

Definitions used in section 251I 6

debt relief order

“debt relief order” means an order made by the official receiver under this Part;

Defined in s.251X(1) · see it in the full Act
the debtor

(2) In Schedule 6 “the debtor” means the company or the individual concerned.

Defined in s.386(2) · see it in the full Act
debtor

“debtor” means—

(a)

in relation to an application for a debt relief order, the applicant; and

(b)

in relation to a debt relief order, the person in relation to whom the order is made;

Defined in s.251X(1) · see it in the full Act
qualifying debt

(2) In this Part “qualifying debt” means (subject to subsection (3)) a debt which—

(a)is for a liquidated sum payable either immediately or at some certain future time; and

(b)is not an excluded debt.

Defined in s.251A(2) · see it in the full Act

“qualifying debt”, in relation to a debtor, has the meaning given in section 251A(2);

Defined in s.251X(1) · see it in the full Act
the application date

“the application date”, in relation to a debt relief order or an application for a debt relief order, means the date on which the application for the order is made to the official receiver;

Defined in s.251X(1) · see it in the full Act
party

(3) In section 72B(1) and this paragraph “party” to an arrangement includes a party to an agreement which—

(a)forms part of the arrangement,

(b)provides for the raising of finance as part of the arrangement, or

(c)is necessary for the purposes of implementing the arrangement.

Defined in Sch.2A para.1(3) · see it in the full Act

(4) “Party” to an arrangement includes a party to an agreement which—

(a)forms part of the arrangement,

(b)provides for the raising of finance as part of the arrangement, or

(c)is necessary for the purposes of implementing the arrangement.

Defined in Sch.ZA1 para.19(4) · see it in the full Act

Cases considering section 251I 6

Secretary of State for Work and Pensions v Payne and another

[2011] UKSC 60 · 14 December 2011Limits

At the end of an unreversed moratorium, the debtor is discharged from the specified qualifying debts. The outstanding benefit or Social Fund liability is consequently extinguished (see paras [11]–[12]; [26]; [40]–[44]). The judgment notes the statutory exception to discharge for debts incurred through fraud (see para [11]). The judgment notes that discharge does not apply where a court later revokes the debt relief order (see para [11]).

Christina Sharples v Places for People Homes Ltd.

[2011] EWCA Civ 813 · 15 July 2011

Confirms that the debtor is discharged from specified qualifying debts at the end of the moratorium. This supported the conclusion that the same debt should not be recovered through a possession condition. (see paras [28], [81]-[83])

Secretary of State for Work & Pensions v Payne & Anor

[2010] EWCA Civ 1431 · 14 December 2010

The court treats section 251I as providing discharge from specified qualifying debts at the end of the moratorium, subject to the statutory scheme. (see paras [17]; [89])

What each judgment says about section 251I is in the case-law panel in the full Act.