IPA and NIL Tax code

dickoa

Few questions looks like we or i will almost defenately get an IPA

1:-Do you automatically get a nil tax code if you go BR and you are PAYE tax?

2:-Can the OR just ask for the money saved from the NIL tax code?

3:- Does an IPA change once in place i.e. two years time you get a good pay rise?

4:- Does the IPA always last three years how is the length of time established?

5:- How long is it usually before you find out if your getting an IPA and do they change there mind?

6:- Does the OR require proof of I&E in terms of Gas and Elec Bills things like that or is it done on trust?

7:- Once discharged whats the likelhood of getting a mortgage what time scales before you can get mortgage?

Thanks Very Much

pinksteviegirl

Answers from my own horrible experience (which is still on going!)

1) The OR or insolvency representative will contact the tax office who will then change your tax code no nil and refund any tax that you have paid so far this year (if its this year you have gone bankrupt in) this refund goes directly to the OR/Insolvency practioner.

The nil tax code runs from tax year to tax year so even if you were made bankrupt today the nil tax code would be from April 08 to April 09 - thus the reason why a refund is normally required. Don't be fooled though and think the tax office will automatically change your tax code back to normal though next year - they wont! You will need to contact them in March 09 to tell them that it needs to change back to normal. If you don't and you continue with a Nil tax code they will want that money back!

2) The money that you would have paid in tax will be paid directly to the OR/insolvency practioner as part of the IPA - YOU WILL NOT GET TO KEEP IT.

3) If you have any changes in circumstances - ie your wages go up or down or you get a bonus etc you will need to tell the OR/Insolvency practioner as it could affect any IPA payments you make. Failure to do so is VERY naughty.

4) IPA's last a max of 3 years - they can be shorter if you pay it all off quicker or you suffer finantial difficulty and they have to stop your payments for a while

5) I found out I would need to go into an IPA on my second OR interview because I had too much surplus earnings left over! I pay £125 a month (plus for the first year I also paid them my tax)

6) The OR will need proof of all utility bills, I&E - also the neater and more prepared you are the easier it is. TAKE COPIES OF EVERYTHING YOU SEND TO THEM SO THAT IF THEY QUERY ANYTHING YOU CAN SEE WHAT THE HELL THEY ARE ON ABOUT.

7) Once discharged you 'could' get a mortgage but it would be at a massive interest rate - the term is called a 'sub prime' mortgage. Some mortgage companies will never lend to ex bankrupts, some say you have to have been discharged for 1 year, 3 years etc.
I'm waiting till my 6 years from the date of my bankruptcy is over, getting it removed from my credit report and then trying. BUT - if they ask you on your application have you ever been bankrupt you must say YES - or you could be comminting fraud.


Just remember - be as honest as you can with your OR and they will be more likely to help you out and see your point of view on things than if you lie about everything!

Good luck!!:A

dickoa

Do they constantly want bills then or just a couple to give them an idea?
Also if you dont get an IPA do you still get a nil tax code?
With regard to the bonus what will happen there mines due in Jan 09?
I see youn was discharged May 2007 do they still require updates from you etc?

pinksteviegirl

So many questions!

I'm casting my mind back now coz its been over 2 years since I did it all.
I had to provide them with copies of my latest utility bills, copies of my lastest statements for my loans, credit cards etc. I also had to give them I think 3 months worth of bank statements (it might have been 6 months I can't remember) I also had to give them loads of my payslips too.

I don't know about the tax code thing if you don't get an IPA - maybe someone will?

I had a small bonus. You have to declare them to the OR. Its up to them to decide if you have to give them all or any of it. Luckily because mine was a very small amount in comparrison to what I owed I didn't have to give them any of it.

I was discharged in May 07 yes but if you are part of an IPA you still have a duty to inform your OR of any changes in circumstances. What with all the utility bill increases etc I now need to get a second job so I had to ask them if if it would be ok to take on a second job because technically you have to declare your extra income as you could pay some of it back to the OR. Luckily because I will only be earning a very small amount extra but my bills have gone up I'm ok and don't have to change my payment amount.

The reason people enter IPA's is because they have surplus money left over after all their out goings are worked out (including money each month for hair cuts, birthdays etc) If that surplus money is a decent amount and its not technically needed for anything else then yes they will want you to enter into an IPA and make payments.
I'm happy to be in an IPA because what I had before I went bankrupt was pure hell and I wouldn't go back.

I've just copied this from a very good website which has lots of good info

i) What is the purpose of an Income Payments Order ?

One of the aims of bankruptcy is that the creditors should receive part or full payment of what they are owed. Creditors often feel aggrieved when they believe that the bankrupt continues to enjoy a good lifestyle whilst the debts remain unpaid. To address this point, section 310 of the Insolvency Act 1986 provides that the trustee can apply to the court for an order that the bankrupt (or his/her employer) make regular payments from his/her income into the estate from ‘surplus’ income. Such an order is known an Income Payments Order (or IPO).

This is the website - I would check it out if I were you.... http://www.insolvencyhelpline.co.uk/bankruptcy/what_is_bankruptcy.php

I'm away from my computer now until Monday so if you need any more info I won't be able to reply until then.

Cheers

pinksteviegirl

I forgot to paste the rest of that extract so here it is - the bit specically about IPA.

The Enterprise Act 2002 (EA2002) extends this idea by introducing the Income Payments Agreement (IPA) to run alongside IPOs. IPAs are entered into voluntarily however, there is a formal binding agreement between the official receiver and the bankrupt that the contributions will be made. In effect, the IPA works in the same way as an IPO but removes the need for the official receiver or trustee to make an application to court.
NB Where the bankrupt has income in excess of expenditure,an IPA should be obtained in preference to an IPO, which should only be sought in those cases where the bankrupt does not consent to the proposed IPA.

dickoa

Now some more questions i have done a SOA for me and my partner together and separately not sure how this will work she earns £420 and myself £2100 so i pay all the bills etc just leaves her with the childcare costs is this the best way i will post it up anyways

Rent- 800
Council Tax- 120 (at the mo for current house)
Gas and Elec- 100 (expensive i know)
Water & sewerage - 50
Mot/Service – 30 (both cars)
TV lience - 12
Food - 400 (including work)
Road tax - 30 (both cars)
Petrol- 250
Clothes- 100 (for all of family)
Hairdressers - 25 (all family)
Prescription- 10
Childs activities - 20 (swimming little boy)
Holidays/xmas/Emergancies - 50
Mobile phone house phone - 70
Childcare- 300
Optician- 15
Dentist- 15
Laundry- 20
Life insurance/car insurance/contents- 140

Total £2557
Incoming £2100+£420+£40=£2560

£2560-£2557=£3

xxxxxs Outgoings
£300 Childcare
£15 Dentist
£15 Optician
£20 Mobile phone
£20 Children’s activities (Travis Swimming)
Total £370
£420-£370=£50


xxxxs Outgoings
Rent- 800
Council Tax- 120 (at the mo for current house)
Gas and Elec- 100 (expensive i know)
Water & sewerage - 50
Mot/Service – 30 (both cars)
TV lience - 12
Food - 400 (including work)
Road tax - 30 (both cars)
Petrol- 250
Clothes- 100 (for all of family)
Hairdressers - 25 (all family)
Prescription- 10
Holidays/xmas/Emergancies - 50
Mobile phone house phone - 50
Laundry- 20
Lifeinsurance/car insurance/contents- 140
TOTAL £2187
£2100-£2100=£-87

Theres child tax credit to add as an income thats £40 and my OH's surplus so combined it balances out to £3 surplus
we are family of 3 little boy one and half

pinksteviegirl

I'm sorry - I really don't know about SOA's so maybe it might be best to find a bit of advice from someone else.
But if you haven't got any surplus income left then really what can they take???

oneandonlyboy

1:-Do you automatically get a nil tax code if you go BR and you are PAYE tax?
Depending on the time of year you go bankrupt if it is close to the end of the tax year your tax code might not change.

2:-Can the OR just ask for the money saved from the NIL tax code?
The money from your tax goes towards an IPA

3:- Does an IPA change once in place i.e. two years time you get a good pay rise?
Most of the time is does, if you IPA has a clause which you still need to inform the OR within 21 days of any change of income

4:- Does the IPA always last three years how is the length of time established?
It lasts 36months.

5:- How long is it usually before you find out if your getting an IPA and do they change there mind?
Can happen anytime until discharged.

6:- Does the OR require proof of I&E in terms of Gas and Elec Bills things like that or is it done on trust?
No, but the OR uses set figures as guide lines, if its above them you will need proof.

7:- Once discharged whats the likelhood of getting a mortgage what time scales before you can get mortgage?
With the current credit problems you will need a large deposit ie min of 30% and a couple of years after discharge, but the interest rate will be higher than normal rates.
Thanks Very Much[/quote]

oneandonlyboy

I notice you have two cars you might lose 1 or maybe both depending on the value of them or if they are on HP then the company might take them back.

tigerfeet2006

When you do your SOA's you each put down your own income and the joint household bills, you then put your own individual expenses on your own forms. When it comes to the section where it says does any one else contribute you put the other persons contribution to the joint household down there, this will be their income less their personal expenses.

tigerfeet2006

dickoa wrote: »

Now some more questions i have done a SOA for me and my partner together and separately not sure how this will work she earns £420 and myself £2100 so i pay all the bills etc just leaves her with the childcare costs is this the best way i will post it up anyways

Rent- 800
Council Tax- 120 (at the mo for current house)
Gas and Elec- 100 (expensive i know)
Water & sewerage - 50
Mot/Service – 30 (both cars)
TV lience - 12
Food - 400 (including work)
Road tax - 30 (both cars)
Petrol- 250
Clothes- 100 (for all of family) the OR may cut this but leave it and see.
Hairdressers - 25 (all family)
Prescription- 10
Childs activities - 20 (swimming little boy)
Holidays/xmas/Emergancies - 50 Just put this down as holidays
Mobile phone house phone - 70 split this into phone and mobiles
Childcare- 300
Optician- 15
Dentist- 15
Laundry- 20 Is this dry cleaning?
Life insurance/car insurance/contents- 140 divide this up into the three different conponants

Total £2557
Incoming £2100+£420+£40=£2560

£2560-£2557=£3

xxxxxs Outgoings
£300 Childcare
£15 Dentist
£15 Optician
£20 Mobile phone
£20 Children’s activities (Travis Swimming)
Total £370
£420-£370=£50


xxxxs Outgoings
Rent- 800
Council Tax- 120 (at the mo for current house)
Gas and Elec- 100 (expensive i know)
Water & sewerage - 50
Mot/Service – 30 (both cars)
TV lience - 12
Food - 400 (including work)
Road tax - 30 (both cars)
Petrol- 250
Clothes- 100 (for all of family)
Hairdressers - 25 (all family)
Prescription- 10
Holidays/xmas/Emergancies - 50
Mobile phone house phone - 50
Laundry- 20
Lifeinsurance/car insurance/contents- 140
TOTAL £2187
£2100-£2100=£-87

Theres child tax credit to add as an income thats £40 and my OH's surplus so combined it balances out to £3 surplus
we are family of 3 little boy one and half[/quote

If you combine this with my other post you should be fine. Hopefully others will be along to comment soon.