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  • FIRST POST
    • Magpie170808
    • By Magpie170808 6th Nov 17, 1:57 PM
    • 26Posts
    • 9Thanks
    Magpie170808
    Income payment arrangement dodge - career change/break
    • #1
    • 6th Nov 17, 1:57 PM
    Income payment arrangement dodge - career change/break 6th Nov 17 at 1:57 PM
    Hi all,

    I declared myself bankrupt in late July and in order to avoid being hit with an income payment arrangement I took a job that pays about half the one I did shortly before I went bust. I would not have done this but for the rule change in 2010 which basically, stripped all incentive for the bankrupt to earn any money over and above "reasonable needs" as agreed with the official receiver (OR). It used to be you kept 50%, or 30% if you're a high earner, during the term of the income payment arrangement, of this "excess income". Now the OR would take the lot, for three years!
    So I basically jacked in my £30k job and replaced it with a £15k job. At least this way I only have to manage on a "reasonable needs" income for one year, rather than three. I've just passed the 100 day mark without any problems, other than the compromise to my living standards.
    I'm just wondering if anyone else out there has done anything similar, has the government shot creditors in the foot with this rule change or am I one of only a very few cheeky/brave/selfish? enough to do this? I am confident I will be able to return to my old job after discharge as I have skills and qualifications that are in demand.
    Last edited by Magpie170808; 06-11-2017 at 1:59 PM. Reason: typo
Page 1
    • StopIt
    • By StopIt 6th Nov 17, 2:13 PM
    • 1,391 Posts
    • 1,183 Thanks
    StopIt
    • #2
    • 6th Nov 17, 2:13 PM
    • #2
    • 6th Nov 17, 2:13 PM
    The bit at the end is why it was likely thought that it was worth doing the change.


    You may well be able to get your old earning power back after the BR period. The economy might crater, and you may find yourself unable to all the same.


    You've took a calculated risk, which is totally fine. As you said, it has also had costs to your living standards. Some people would rather pay their excess income to an IPA for 3 years to wipe their debt as of course, they were paying this and then some on managing unsustainable debt, hence the BR.


    You certainly wont be alone in your decision. For those who work Overtime or the self employed, it is certainly an incentive to work to your needs, and not work for the OR. It isn't for everyone, however.
    • Darrenm325
    • By Darrenm325 6th Nov 17, 2:38 PM
    • 32 Posts
    • 6 Thanks
    Darrenm325
    • #3
    • 6th Nov 17, 2:38 PM
    • #3
    • 6th Nov 17, 2:38 PM
    I’m in a job where overtime is compolsery some months I will do 10 hours of over time and other months up to 60-80 hours overtime where I can earn a extra £800-£1000 in one month how would they work out a suitable ipa amount for overtime that changes each month
    • Magpie170808
    • By Magpie170808 6th Nov 17, 3:05 PM
    • 26 Posts
    • 9 Thanks
    Magpie170808
    • #4
    • 6th Nov 17, 3:05 PM
    • #4
    • 6th Nov 17, 3:05 PM
    Darren,

    Overtime is a funny one. I would say if it is contractural then the OR will take it into account. I have done some extra hours (non compulsory) without any problems, which has been useful to create a financial buffer and pay for the odd treat not really allowed for under the post 2010 regime, a bit of a loophole, I guess. If you're thinking of going bankrupt I'd definitely speak to step change first. I actually defied their advice but the info they gave me was very useful.
    • Darrenm325
    • By Darrenm325 6th Nov 17, 3:17 PM
    • 32 Posts
    • 6 Thanks
    Darrenm325
    • #5
    • 6th Nov 17, 3:17 PM
    • #5
    • 6th Nov 17, 3:17 PM
    I’m all ready BR 3 months in now
    • StopIt
    • By StopIt 6th Nov 17, 3:30 PM
    • 1,391 Posts
    • 1,183 Thanks
    StopIt
    • #6
    • 6th Nov 17, 3:30 PM
    • #6
    • 6th Nov 17, 3:30 PM
    I’m in a job where overtime is compolsery some months I will do 10 hours of over time and other months up to 60-80 hours overtime where I can earn a extra £800-£1000 in one month how would they work out a suitable ipa amount for overtime that changes each month
    Originally posted by Darrenm325

    Remember they don't have to in order to claim that money.


    An IPA is a formal mechanism but not the only one.


    If you earn £1,000 more than your SOA states in one month, you'll have to report this to the OR, who will take the excess payment, as that will belong to the OR. No IPA needed for that.
    • Butts
    • By Butts 6th Nov 17, 4:42 PM
    • 157 Posts
    • 51 Thanks
    Butts
    • #7
    • 6th Nov 17, 4:42 PM
    • #7
    • 6th Nov 17, 4:42 PM
    Hi all,

    I declared myself bankrupt in late July and in order to avoid being hit with an income payment arrangement I took a job that pays about half the one I did shortly before I went bust. I would not have done this but for the rule change in 2010 which basically, stripped all incentive for the bankrupt to earn any money over and above "reasonable needs" as agreed with the official receiver (OR). It used to be you kept 50%, or 30% if you're a high earner, during the term of the income payment arrangement, of this "excess income". Now the OR would take the lot, for three years!
    So I basically jacked in my £30k job and replaced it with a £15k job. At least this way I only have to manage on a "reasonable needs" income for one year, rather than three. I've just passed the 100 day mark without any problems, other than the compromise to my living standards.
    I'm just wondering if anyone else out there has done anything similar, has the government shot creditors in the foot with this rule change or am I one of only a very few cheeky/brave/selfish? enough to do this? I am confident I will be able to return to my old job after discharge as I have skills and qualifications that are in demand.
    Originally posted by Magpie170808
    I moved down from Scotland and halved my earnings as well. I also rented a place that falls within the LHA just in case I had to go on the "old king cole" and was assured all my rent would be covered by Housing Benefit.

    Like you I have had a "designer bankruptcy" aimed at avoiding an IPA whilst still enjoying a comfortable if basic lifestyle. I was amazed how lax the OR is and the interview was far less invasive than I was expecting.

    My only regret is that I did not accumulate a few grand in cash prior to my bankruptcy. I was expecting every line of my bank account to be scrutinised but it didn't happen.

    If an IPA resulted in you only paying back 50% of the excess earnings I to would have maintained my earnings at the previous level.

    As they take the lot what's the point.
    • xfoxuk
    • By xfoxuk 6th Nov 17, 5:26 PM
    • 19 Posts
    • 5 Thanks
    xfoxuk
    • #8
    • 6th Nov 17, 5:26 PM
    • #8
    • 6th Nov 17, 5:26 PM
    Everyone is different, but If bankruptcy was caused due to Mental health, and you have medical evidence, then probably better off on JSA/ESA. The OR will look into people changing jobs before hand, selling off assets, boasting about it on forums etc
    • BorisThomson
    • By BorisThomson 6th Nov 17, 6:19 PM
    • 538 Posts
    • 882 Thanks
    BorisThomson
    • #9
    • 6th Nov 17, 6:19 PM
    • #9
    • 6th Nov 17, 6:19 PM
    I can't believe MSE allows threads like this, which give such a bad name to bankrupts. All those genuine BRs working hard to get their lives back on track get a hard time because of people like you.
    • Somerset La La La
    • By Somerset La La La 6th Nov 17, 8:07 PM
    • 439 Posts
    • 122 Thanks
    Somerset La La La
    I don't think there's anything wrong with it - rules are there to be tested/broken/flexed....

    If they didn't want you changing jobs, they'd base IPA on average earnings in last 12 months.... which would push some people further into difficulty and so probably onto JSA etc.

    Likewise some people, had bankruptcy not existed, would HAVE to repay their debts via DMPs, arrangements to pay etc etc. So you could argue that some (many?) people that have gone bankrupt are bending the rules by doing that rather than agreeing payment plans with lenders.



    Personally I think I owed approx £60k (no idea if thats high/low). Mistakes are mistakes, I reached that number and had to find a way to pay it back.

    Given my likely career progression (from ~18 months after bankruptcy onwards), I'd potentially have been able to enter into agreements with lenders, and pay the debt off... eventually.

    I decided that it was not the wisest idea because I'd be paying off debt for (say) 10 years, have no sayings at the end of it, have a trashed credit record for say 16 years (10 years to close accounts, then 6 years of the adverse) and need to save up afterwards for a mortgage etc.

    By going bankrupt, in 4 years from BR I'm eligible for a mortgage (subject to managing to save). Technically, you're eligible from 12 months (discharge day), if you can "save" enough deposit.

    I'd call that taking advantage of the system, in a similar way as posters on here have avoided IPAs. Again - if the rules let you do it, then do it. If companies were that concerned about losing money to bankrupts, many more would say no lending EVER (and search the Gazette with each credit application) or no mortgages until five, six, ten, twenty.... years discharged.

    That would then have changed my decision on how to deal with my problem debts.

    Everyone should lookout for themselves, without taking the mick and breaking any laws. Failure to do so may mean they're back in that situation again!

    The 100% surplus rule is stupid IMO - if you're allowed a vehicle for work, and that suddenly breaks down with a £900 repair bill, how do you pay that if you've been given scraps to live on for 3 years post bankruptcy?


    Also need to remember that if the OR thinks you're taking the mick, they'll go through everything line by line.

    I remember reading about 1 person who put their expenses to be the same as the absolute limits from the OR Technical Guidance (or 1p under, something silly like that).

    The OR knew they were taking the mick, and gave them a very hard time, wanted receipts for everything, proof of bill payments etc.

    The OR is human, and going bankruptcy is not something the vast majority of people will do unless they really need to. I didn't think it would be that big a deal psychologically - but years on still seeing you struggle to get cheap car insurance (some companies decline based on credit file soft search = BR record), you can't take advantage of bank switching offers, you no longer have access to cheap finance.... it does add up.

    Whilst there is no doubt many people are in a significantly better position after bankruptcy than before (IPA or no IPA), due to debts being written off - can you put a price on the following 6/7 years of being declined or referred for "normal" things?
    Last edited by Somerset La La La; 06-11-2017 at 8:10 PM.
    Ex-Bankrupt, Discharged 09/2015
    Capital One - Jul 2016, £3,750 Never ending 0%....
    Aqua Reward (0.5% Cashback) - Nov 2016 - £1,950
    Vanquis Chrome 24.7% - July 2017, £1,000
    Car Loan - Sept 2017 - £15k outstanding, early settlement = £10k....
    Rebuild for Mortgage (10/2018)
    • KeepOnKnitting
    • By KeepOnKnitting 6th Nov 17, 10:03 PM
    • 105 Posts
    • 124 Thanks
    KeepOnKnitting
    I did indeed do something similar to this. I was self-employed at the time of bankruptcy, so I made sure that I didn't do too many hours in order to attract an IPA. After years of 50+ hour weeks, it was great to only have to work 35-40 hours a week to survive. Then I became a student nurse, and the OR was even less interested in my income. I think I am putting infinitely more into society this way than I would have been working on minimum wage for 15 years to pay back £50k I owed from the property crash.
    On a yarn diet, knitting my stash in a year of tight budgeting.
    • debt doctor
    • By debt doctor 7th Nov 17, 8:20 PM
    • 4,165 Posts
    • 5,832 Thanks
    debt doctor
    Bankruptcy is all about a fresh start, free of financial burden.
    The journey getting there is often a very difficult one, and almost all bankrupts struggle for a very long time trying everything they can to avoid bankruptcy.
    For some this means working long hours or 2/3 jobs to try to pay off debts and their mental health also often suffers as a result.
    The choice to do whatever you want regarding your new employment, direction, or taking a rest in bankruptcy has been earned - and for that reason, providing it is lawful, a bankrupt should do what the hell they want!
    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
    • tomconfused
    • By tomconfused 7th Nov 17, 10:30 PM
    • 11 Posts
    • 4 Thanks
    tomconfused
    Hi, in my experience the OR showed little or no interest in setting up the agreement of what to pay, what I was earning or asked any questions.

    When I first went bankrupt they asked me to fill out my expenditures without providing any guidance. I put my rent as that was all I thought was my must pay expense. They sent me the first payment agreement which was for all of my salary except for the rent. I phoned them up and said how can I afford food I was better off before I went bankrupt!

    I sought advice from cab and they told me basically there is a list of reasonable expenses they expect you to pay for. The cab advisor very quickly got my essential expenses right up to 95% of my salary and said send that in and they may knock you back on a few items as each OR has a bit of discretion and let’s you have somethings others don’t. The list included thins like £15 a month glasses (I didn’t wear glasses) £50 a month contingency budget, £20 a month Christmas savings, £10 a month stationary, full tv and broadband package £100, newspapers £5 per week and the list went on. Things I would never have thought of putting that very quickly added up like £20 haircut, £25 a month toiletries and so on. The one I was outstanded by was when cab advised I put £300 a month for food just for myself. Again this wasn’t even questioned by the OR.

    I was never asked for any proof of anything and they accepted straight away. I changed jobs a few times within the 3 years and always updated my pay rises but I also added onto all the expenses. The impression I always got was they really didn’t care as long as I was making a payment of some sort. I was earning about £25k and the highest payment they wanted was £125 a month except that first time when they wanted £1000.

    I wouldn’t turn down earning extra money just put your expenses as high as you can reasonable justify. If they say no they say no.
    • Windofchange
    • By Windofchange 8th Nov 17, 9:37 PM
    • 563 Posts
    • 641 Thanks
    Windofchange
    Surely there is more to this though than just money. Presumably your previous job was a higher grade, or with more responsibilities. Even if you are contracting, you are loosing these three years of experience. In my line of work, I would have carried on because although I may not earn anymore due to the OR taking it, it would still be 3 extra years of experience which would look far better on my CV than I just bummed around filing notes or something.
    Debt Free by Xmas 2017
    86.58% of Virgin CC £3750 0% of Barclaycard CC £1123.91 100% of Bank of Scotland CC £704.74 100% of Student Loan £3124
    • joa1210
    • By joa1210 10th Nov 17, 12:42 PM
    • 16 Posts
    • 2 Thanks
    joa1210
    taking the BR option means for me that i wont have to return to work full time after maternity leave. i have 2 other children and had to return to work full time after both of them, simply to repay debts that never went down.
    When i found out i was pregnant this time we knew there was no way we could sustain the payments when my salary would fall from £1800 to £560 per month.
    it's given me a choice i never had. it took a lot of soul searching to make the decision but for is as a family it's the best thing i ever did.
    • Singlemumm
    • By Singlemumm 10th Nov 17, 5:18 PM
    • 24 Posts
    • 1 Thanks
    Singlemumm
    you have earned 25k and IPA only £125 instead of 1000?
    how it is possible?
    I earning ~19000 and IPA ask me to pay nearly £400.
    • jonesy1973
    • By jonesy1973 14th Nov 17, 9:29 AM
    • 41 Posts
    • 29 Thanks
    jonesy1973
    I came onto the forum to post a thread highlighting the same predicament and must be honest, it was refreshing to read this. I was declared bankrupt in June and although I'm eager to earn more money for my family I have decided to pretty much stay under the radar as best I can until discharged. The road to bankruptcy has not been easy and I admit to making some fairly bad decisions in the past, however, I can see light at the end of what has been, a very dark tunnel. Call me lazy, unethical, scum of the earth, whatever, I just don't see the point in working my fingers to the bone which will result in higher childcare costs and less family time, all the time feeling demoralised that any extra money I earn will vanish into thin air. ( that's how I see it, sorry.)
    I have worked since leaving school and still have ambition but I have made the decision to use this year to essentially, re-charge the batteries, be a dad, read, learn, and look forward to the future.
    Embrace The Chaos!
    • haggis0073
    • By haggis0073 14th Nov 17, 2:30 PM
    • 31 Posts
    • 14 Thanks
    haggis0073
    we all get into debt for different reasons, i too have made some stupid decisions but thats life, i have now learnt from my mistakes, i am now insolvent and will be applying in the next month, to say that someones kids will have a look of shame on their faces is ridiculous and not very helpful.

    I have seen negative comments on this forum but the positive and helpful comments far outshine those. Best to ignore these comments and focus on the people that actually want to help and give advice

    My working hours are now reduced, and will stay reduced until i go bankrupt and then get discharged, hopefully within the next year i will become better at planning financially and with my debt experiance not falling foul of debt again, its about a fresh start
    • Red-Squirrel
    • By Red-Squirrel 14th Nov 17, 8:31 PM
    • 1,885 Posts
    • 5,183 Thanks
    Red-Squirrel
    You’ve got the specialist skills and qualifications that are so in demand that employers will be awaiting you with open arms to put you back in your £30k a year job? £30k? BFD! It doesn’t sound like you’re a brain surgeon or anything? Wow the skills and qualifications to get you back as the king of the jungle...earning a full time black cab driver’s wage or the same as a aupermarket shelf stacker “team leader”.

    Get over yourself.
    Originally posted by Ronaldo Mconaldo
    Lots of people have skills and qualifications that are in demand but still earn less than £30K.

    Nurses, midwives, teachers, junior doctors...
    • bewildered1
    • By bewildered1 14th Nov 17, 10:07 PM
    • 32 Posts
    • 15 Thanks
    bewildered1
    You’ve got the specialist skills and qualifications that are so in demand that employers will be awaiting you with open arms to put you back in your £30k a year job? £30k? BFD! It doesn’t sound like you’re a brain surgeon or anything? Wow the skills and qualifications to get you back as the king of the jungle...earning a full time black cab driver’s wage or the same as a aupermarket shelf stacker “team leader”.

    Get over yourself.
    Originally posted by Ronaldo Mconaldo
    You are a troll. If you have nothing to say except insults do everyone a favour and say nothing at all.
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