Why do I have to pay IP payments for 3 years?

bat-out-of-hell

While this was a case in England, you may find it of intrest

The official receiver or trustee must ensure that an agreement with the bankrupt to make regular repayment from his/her income is only entered in to where the bankrupt can afford to do so. In the case of Boyden v Watson [2004] BPIR 1131, Manchester County Court, District Judge E R Jones 27 January 2004 [note 12] the trustee made application to the court for an IPO following a failed attempt by the trustee to set up a voluntary payments agreement with the bankrupt (this was prior to the enactment of the EA2002 IPA provisions). The court stated that the only issues which required consideration were the amount the bankrupt could afford to pay and for what period. The trustee's application was dismissed because the court held (having tested the bankrupt's explanation as to the reasonableness of his monthly expenditure) that it was not possible to make an IPO as this would have the effect of reducing the income of the bankrupt to below the amount necessary to meet his reasonable domestic needs, and that to make a nominal order for the period of three years would be of no benefit to the creditors. The court commented further that the trustee's application was misleading in that, rather than seeking to obtain an IPO in order to fulfil his duty to realize and distribute the bankrupt's estate, the trustee was primarily motivated in making the application by a wish to guarantee payment of his fees.

So, at least in theory an IP can not just take all the surplus for his her benefit.

Sadly we dont get that much posted re the scotish side of things, but court rulings can cross the boarder, in principle at least.

How far that may get you would ultimatly depend on the judge, but he should take previous cases into account.

I think you are wise to seek further clarification, as there is a big differance between the fees we see in england, and what you have stated, it is certainly enough to make me wonder if somthing is not right here.



The fee for BR should be no where near as high as that for a trust deed, unless it was a realy complex case, just as the fee for BR is not normaly as high as that for an IVA, the nearest comparison i can think of :think:

bat-out-of-hell

not sure if this helps but

http://www.aib.gov.uk/Resource/Doc/4/0000676.doc

sec 4.13 covers IPA

broxiebear1

Kaelin wrote: »

Thanks everyone.

onward - I'm in Scotland so the water rates are included in council tax.

ontheroad - I don't totally understand what you mean about the IP not wanting me bankrupt? They told me it's really my only option left. And they said that I would have to pay the same £185 a month as was worked out for the Trust Deed but it would go solely to pay for the administration of the bankruptcy and none of it would go to the creditors. That's why I was surprised that Northern Rock rejected the Trust Deed as if they get money from that and none in bankruptcy it makes no sense. Though I've since learned that they get tax back on me being a bankrupt customer

out of cash - the fees that were worked out in the TD which I assume are to be the same in bankruptcy are £6181. This is made up of Trustee's fees at 6k, VAT at £700, Third Party Fees (Payplan) £881 (yeah - Payplan nicely never mentioned they charge fees), Estimated Outlays £350 and Accountant in Bankruptcy fee £250. I guess they apply the very same fees to bankruptcy? That's why I'm going to speak to a money advisor before I sign the bankruptcy documents with this IP, incase these are high or if it would be the same with any other IP.

dancing fairy - I'm in Scotland, live on my own with no kids and have a dog

Given what everyone has said, I think the rules in Scotland must be really different and that you have to pay the full difference between allowed income and expenditure to the IP

hi go to moneyadvice scotland or cab for free advice it will cost you £100 to go b.r

wok_boy

broxiebear1 wrote: »

hi go to moneyadvice scotland or cab for free advice it will cost you £100 to go b.r

The OP has already gone bankrupt

She's querying why she's got to make payments for 3 years.

coolcait

Kaelin wrote: »

Thanks everyone.

...
ontheroad - I don't totally understand what you mean about the IP not wanting me bankrupt? They told me it's really my only option left. And they said that I would have to pay the same £185 a month as was worked out for the Trust Deed but it would go solely to pay for the administration of the bankruptcy and none of it would go to the creditors. That's why I was surprised that Northern Rock rejected the Trust Deed as if they get money from that and none in bankruptcy it makes no sense. Though I've since learned that they get tax back on me being a bankrupt customer

out of cash - the fees that were worked out in the TD which I assume are to be the same in bankruptcy are £6181. This is made up of Trustee's fees at 6k, VAT at £700, Third Party Fees (Payplan) £881 (yeah - Payplan nicely never mentioned they charge fees), Estimated Outlays £350 and Accountant in Bankruptcy fee £250. I guess they apply the very same fees to bankruptcy? That's why I'm going to speak to a money advisor before I sign the bankruptcy documents with this IP, incase these are high or if it would be the same with any other IP.

...
Given what everyone has said, I think the rules in Scotland must be really different and that you have to pay the full difference between allowed income and expenditure to the IP

Hiya Kaelin

Well, they shouldn't be paying a third party a referral fee for a Trust Deed. And the cost of any work done by a third party shouldn't be given preferential treatment over any other creditor. So the 'Payplan fees' may be against the rules. Maybe you should ask the accountant in bankruptcy for their view on that :A

While you're at it, it might be worth while asking them how much they pay the companies who manage bankruptcies for them. If it turns out to be less than your IP has quoted, then you might want to think about having the AiB as your Trustee.

In Scotland, the Trustee can take the full amount of your surplus. It doesn't always happen, but it is possible.

I think that the AiB fee of £250 is specifically for Trust Deeds - it's to do with the AiB supervision fee. The bankruptcy fee is £100 - if an IP or anyone else says that you have to pay more than that, then go and find someone else to advise you.

HTH

P.S Looking at the figures you mentioned for your TD, it looks as if there would be hardly anything left for creditors! £185 x 48 months = £8880. Trustee's fees £6,000; VAT £700; Payplan £881; Outlays £350; AiB fee £250. So, total £8181. How could there possibly be a decent dividend for creditors out of that? Even if I've misunderstood the figures (maybe the £6,000 Trustee fee includes VAT and outlays and AiB fee, for example) there's not much left over. How much of a dividend did they estimate that creditors would get?

(With thanks to bat for the 'confused' icon - comment below is now obsolete - but I left it in to help people understand what was going on! )

[Thinks longingly of the old 'confused' icon - because I am definitely confused right now!].

bat-out-of-hell

There you go coolcait:D:p

coolcait

bat-out-of-hell wrote: »

There you go coolcait:D:p

How stupidly thrilled am I?!!! The 'confused' icon!

Thank you, bat! Thank you! I'm going to try to copy that and put it in my post!

You can tell I'm over-excited - I've had an attack of exclamation marks!!!!

bat-out-of-hell

I wish i could please everyone in my life so easily :rotfl:

(i dread to think where that comment will take this thread:eek::p)

coolcait

bat-out-of-hell wrote: »

I wish i could please everyone in my life so easily :rotfl:

(i dread to think where that comment will take this thread:eek::p)

An admirable sentiment :A

(you dreaded an angelic response? )

Anyway, it's time to say 'goodnight'. So 'goodnight, all'!

bat-out-of-hell

coolcait wrote: »

An admirable sentiment :A

(you dreaded an angelic response? )

Anyway, it's time to say 'goodnight'. So 'goodnight, all'!

It was not your reply i am worried about, I know others on here too well and know what they could make of it;) night coolcait:)