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“Whose money is it?”

Can the Scottish government’s Accountant in Bankruptcy take the child maintenance money off a child to pay the debts of the parent? Alan McIntosh, senior money adviser with a Scottish local authority, queries the legalities.

Alan   McIntosh

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Alan   McIntosh
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In a recent bankruptcy case I was involved in, this question arose: “Whose money is it?”


It involved a single parent whose only income was child maintenance and social security benefits. The Scottish insolvency service, Accountant in Bankruptcy (AiB), had asked her to pay a contribution towards her bankruptcy.


Now it’s beyond dispute no contribution can be taken from social security benefits, which led me to the conclusion, the contribution must be coming from the child maintenance, being the only other source of income.


AiB have since revealed they have taken legal advice, which they believe states they are able to take a contribution from child maintenance; but without having seen the AiB’s advice, I have to say I think they are wrong and they are possibly acting ultra vires.


The Family Law (Scotland) Act 1985 (1) (c) makes it clear, the obligation to pay child maintenance is owed by a parent to a child, not to the other parent. Similarly, section one of the Child Support Act 1995 (1995 Act), states every parent of a child is responsible for maintaining them; and in Scotland, even a child as young as 12 can request a maintenance assessment for themselves under the 1995 Act.


So, if this is the case, the question arises, whose income is child maintenance and to what extent can the parent of the child be required to make it available to their creditors or trustee in bankruptcy?


Child maintenance: How should we treat it?


It’s not a simple question to answer, as clearly child maintenance is intended to pay for the maintenance of a child, which means housing, clothing, and feeding them. So, when drafting an income and expenditure, it’s only reasonable that the child maintenance is used when calculating the household income and expenditure. Yet a child may never have benefitted from the household debt or have any liability for it, so legally and morally can funds identifiable as child maintenance, be taken to pay a parent’s debts?


A child has as much right as anyone else to have their property protected and to not be held responsible for someone else’s debts, even their parents. Where these rights are not safeguarded, and money is used to pay parental debts, the question is could this constitute financial abuse?


Most of the responses to a blog which I wrote on the subject, and which disagreed with me, supported their position on a variation of the argument that contributions can be taken as sources of funds lose their individual identity when they become intermingled.


However, in response to that there is no reason child maintenance cannot be paid into a separate bank account, which the parent with custody can have access to, to pay the child’s contribution to household bills.

Where there are surplus funds, and it is clear there are no other source of funds available from which the trustee can take a contribution, then arguably they cannot take it from the child maintenance money, without infringing on the property rights of the child.


It’s not like there are any obligations on a child maintaining their parent’s or their obligations.


This then leads to the question of whether creditors making lending decisions should rely on child maintenance when making affordability decisions for borrowers?


Clearly, the credit may be in the interests of the child whose parent is borrowing the money and, therefore it appears reasonable to be able to rely on the income. However, can a parent assign income that isn’t owed to them, especially when that income is owed to the child to pay for their maintenance and follows the child, not the parent?


There are clearly those who think the obligation to repay debts is owed by the household, which it may be possible to argue where the component members of a household are beneficiaries of the credit, such as in the case of mortgages and utility bills; but where they are not, it is clear, more attention must be placed on not only how much is the household income, but whose income it is.



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