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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

01 MAY 2012

The Mayor and Burgesses of the London Borough of Islington v (1) C (2) The Official Receiver [2012] BPIR 363

(District Judge Hart, 3 February 2012)

In what is thought to be the first case of its kind, the court revoked a Debt Relief Order. Whilst the court could not conclude that the debtor had made preferential payments to creditors, it considered that, having regard to the meaning of reasonable domestic needs in para 7 of Part 2 of Sch 4ZA to the Insolvency Act 1986, the debtor's monthly surplus income exceeded the statutory limit of £50 per month. The question of assessing what was reasonable was not straightforward, as it would vary as circumstances changed, some allowance needed to be made for occasional expenses in addition to regular outgoings and it was necessary to take into account the impact of the debtor's poor health and disability on his expenditure. Nonetheless, it was not possible to justify the debtor's expenditure of £20 per week on cannabis as a reasonable domestic need as it was illegal, even if he took the cannabis wholly or partly for medicinal reasons.

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