The Insolvency Act 1986 makes provision for, amongst other things, bankruptcy and Debt Relief Orders.
When a person is made bankrupt, his property vests in the trustee in bankruptcy. Some items, however, are excluded from the estate, including any assured or secure tenancy (s283). Once a bankruptcy order has been made, no creditor in respect of a debt provable in the bankruptcy may have any remedy against the property of the bankrupt 'in respect of that debt' (s285(3)(a)).
Debt Relief Orders (DRO) provide an alternative method of addressing debt. Where a person has debts of less than £15,000, monthly surplus income of less than £50 and does not own property worth more than £300, he may apply for a DRO which, if granted, has the effect of imposing a 12-month moratorium period in respect of the debt. During the moratorium period, a creditor has no 'remedy in respect of the debt' (s251G(1)).
In two recent conjoined appeal cases, the Court of Appeal has confirmed that an order for possession made on the ground of rent arrears is not a 'remedy in respect of the debt' for the purposes of either s285(3) (bankruptcy) or s251G (Debt Relief Orders) of the Insolvency Act 1986. The fact that arrears of rent are either provable in a tenant’s bankruptcy or form part of the tenant’s DRO does not preclude the landlord from recovering possession based on those rent arrears. Where, however, an order for possession is suspended or postponed on terms, those terms may not require the tenant to repay the arrears, but rather make provision only for the payment of current rent and costs.