The Bankruptcy Club & Supporters Club

flis21

Hi,

Can I join your thread? My hubby and I are currently saving up the fees to go bankrupt. I am trying to face up more to the situation, we have been a bit bury our head in the sand about it all.

Lots of reasons for our debt, mine started when I was getting myself through university, then moved in with hubby (to be then) and we had to buy furniture and house stuff, which mounted up really quickly. Then we got married, which cost a small fortune (although parents paid for some of it). Then, last year, I became ill and had to give up my job at the time, in which I was getting paid 20k. Got another job paying me 13.5K, but I got ill again. Now have a job paying me 11.5k, which I am hoping to keep, but do not stand a hope in hell of being able to pay back all the debts I have.

We did start an IVA, before I became ill, but once I became ill we couldn't keep up the IVA payments, so it has been 'failed', we are just waiting for the certificate. Annoying thing is I thought if they failed the IVA they would make us bankrupt, so we haven't bothered about saving up the fees. But have now found out that they are not making us bankrupt, so we are now in a panic. My hubby gets paid 13 times a year, so gets one month off the rent, but that is not until May next year, not sure we can drag it out that long.

Also really worried, as we have taken out some newer debts to tide us over, including an overdraft and a catalogue account. Think the OR will tell us off for this, not sure if it would be better to try and pay these off before the bankruptcy, but that will take us even longer to pay that off then save up the £950 to go bankrupt. Also not sure what the other creditors will do in the meantime. Probably likely to get CCJ's or similar.

argghh! This is all such a mess, when I try and think about it I get all upset and wound up, so most of the time I just try not to think about it, which I know is not the answer.

Sorry for the essay!
Flis

flis21

badlyoverdrawnboy wrote:

If you go BR with gambling debts you can expect a BRU/BRO but its not the end of the world. Look here. https://www.debtquestions.co.uk/forums

Couldn't seem to get the link to work, what is BRU/BRO? Some of my other half's debts are to do with gambling, although it was all fruit machine gambling, so his statements just show money being drawn out of the account. Would it be better not to mention that the money was spent on gambling?

rog2

flis21 wrote:

Hi,

Also really worried, as we have taken out some newer debts to tide us over, including an overdraft and a catalogue account. Think the OR will tell us off for this, not sure if it would be better to try and pay these off before the bankruptcy, but that will take us even longer to pay that off then save up the £950 to go bankrupt. Also not sure what the other creditors will do in the meantime. Probably likely to get CCJ's or similar.

Sorry for the essay!
Flis

Hi fils21 and welcome to BCSC - Mike will issue your membership number and, doubtless, lots of good advice.
I don't think that the OR will be too critical of your recent loan - as you took it out before you were contemplating bankruptcy. In any case the OR is there to help, not to judge.
Go to see CAB, or the Court, regarding the fees, as court costs can be waived in certain circumstances - this could reduce your costs by around £250.
Don't worry about any CCJ - they will be inclded in your bankruptcy.

sandralovescats

badlyoverdrawnboy wrote:

A little tip but it might not work for everyone. I live in a small village where everybody's business is public knowledge. I petitioned at a County Court not strictly within the area but they were happy to deal with it. Newspaper notice was published in that area not mine. Result hopefully is that its still fairly anonymous. Nearly 2 weeks now and although I felt like sh**e for a few days it gets better. First thing on my mind when waking is no longer debts

I live in a small town and both local County Courts are 11 miles away from me. The "local" paper that (I think) they publish in is local to the whole area and, to be honest, not many people seem to buy it any more. I have never ever seen a listing for bankruptcy in that paper, but then I have not looked!

sandralovescats

rog2 wrote:

I did not tell many people about my impending bankruptcy, other than my family of course, but I did tell those who specifically asked. Strangely enough, I bumped into a chap in Tesco's yesterday, who has a unit a couple of doors away from my old business - and he asked where I had been, as he had not seen me around for a few months I just told him I'd given it all up - seemed easier than having to explain about my bankruptcy.

That's good to know! I have had to give up my main profession due to ill health so that is gone.
I was really bothered about someone stopping me in the street and saying "hey I see you are bankrupt". Stupid really, I know.
To date, I have told nobody, not a living soul. Have to tell the tax inspector on Tuesday!

sandralovescats

INCOME PAYMENT ORDERS/AGREEMENTS (IPO/IPA)

Who can be subject to an IPO or IPA?

Both an IPO and IPA require the bankrupt to make contributions towards the bankruptcy debts from his income, if they can afford to.

In deciding whether the bankrupt can afford to make payments, consideration is taken of the monthly household income and expenditure. Where the bankrupt appears to have income in excess of what he requires to pay for the reasonable domestic needs of himself and his family, i.e. "real disposable income", the OR will seek agreement to an IPA or, if the bankrupt does not agree, application is made to court for an IPO.

This is determined from the Income and Expenses declaration submitted as part of the Statement of Affairs, along with other information the OR may find during interviews and examinations of your accounts.

Such contributions would continue for three years. Further, if the bankrupt has any increase or decrease in income, the IPO/IPA can be reviewed and varied. The court will not make an IPO if it would mean that the income of the bankrupt (after taking into account the payments under the IPO) would be insufficient to meet the reasonable domestic needs of the bankrupt and his family.

An IPO/IPA will only be sought where the bankrupt can make a minimum payment of £50 per month. In cases where the payment would be below this amount it is deemed the cost of collecting would be more than the collection.

An IPO or IPA would not be sought where the bankrupt’s only or main source of income is state benefit payments. The High Court has also stated as a matter of public policy that child benefit and similar benefits should not be included in the statement of income when applying for an IPO.

How long will an IPO/IPA last?

Both IPOs and IPAs run for a full 3 years (36 payments).

IPAs are quicker to obtain as they can be obtained while the OR remains receiver and manager.

The bankrupt must be undischarged at the time the Order is made or the Agreement signed.

The minimum payment is £50 per month.

The agreement

With your Consent

Once the bankrupt has consented to the proposed monthly payment, it is for the official receiver to provide a draft agreement for consideration. The agreement must specify how long the IPA will run for (not more than 3 years from the date of the agreement) and the amount to be paid each month or agreed period if the bankrupt is self-employed, for example and has an income that fluctuates.

Once the IPA has been drafted by the official receiver, it can be presented at interview for the bankrupt to sign or may be sent to the bankrupt for signature requesting that it be returned within 14 days. If the official receiver deems it appropriate, a longer period than 14 days may be specified. This could be true over holiday times or the Christmas period, for example. If the bankrupt decides not to sign the IPA, he/she must notify the official receiver of that decision within the same timescale as specified by the official receiver for return of the signed form.

The Insolvency Service has decided to provide a "cooling off" period for the bankrupt regarding the IPA. If the agreement was signed at interview, the official receiver should take no further action for 14 days. If after 14 days, the bankrupt has not contacted the official receiver to withdraw consent to the agreement, it should be signed and dated by him/her and this is the date that the IPA becomes effective. Where the IPA is sent to the bankrupt by post, the 14-day period will run from the deemed date of receipt by the bankrupt, which is to be 2 days after the date of dispatch by the official receiver and not from the date on which the bankrupt signed the agreement. This means for example, that if the IPA is sent to the bankrupt for signature on 1 September, the 14-day period will run from 3rd – 17th September. If the official receiver receives the agreement signed by the bankrupt before that date, he/she only has to wait until 17 September to sign.

A copy of the IPA signed and dated by the official receiver must then be sent to the bankrupt along with a leaflet which also explains how the bankrupt may make the contribution. Where the IPA directs a third party, such as an employer, to deduct the monthly payments at source, a copy of the agreement must also be sent to the third party.

Without your consent

Where the bankrupt does not consent to the amount sought under an IPA, the official receiver should consider whether to make application to the court for an IPO. However, please note that an IPA can only be entered into prior to the discharge of the bankruptcy and therefore the bankrupt must agree to and the official receiver must accept the IPA prior to discharge. Where the bankrupt does not consent to the IPA or there is insufficient time to obtain an IPA prior to discharge the official receiver has the option of applying for an IPO, since an IPO may be made on an application instituted before the date of discharge

Amount for which an agreement can be sought.

An IPA should not be sought the effect of which would be to reduce the income of the bankrupt below the level considered adequate to meet the reasonable domestic needs of the bankrupt and his/her family

NB: If the bankrupt’s main, or only, source of income is state benefits then an IPA should not be sought.

There is no fixed amount and each case is decided on its own merits after the bankrupt has given details of his/her income and expenditure. Payments should normally be made monthly. The rate of payment under an IPA has been developed along similar lines to those used by the courts themselves in assessing rates for attachment of earnings orders and payment of judgment debts by instalments. This figure should then be discussed with the bankrupt and agreed to by him/her. Where possible, the bankrupt’s consent to the proposed figure should be obtained in writing.

Where the bankrupt is self-employed, a fixed monthly figure may not be appropriate for the IPA as income may be variable. The IPA will have to be tailored to meet the individual circumstances of the case and should be reviewed regularly to allow for fluctuations in income.

Generally, once the real disposable income has been assessed, that is the income remaining after all expenditure necessary to finance the reasonable domestic needs of the bankrupt and his/her family, 50-70% of this should be sought by way of monthly payments. Usually, the higher the real disposable income, the higher the percentage contribution that should be sought.

What can be deemed as reasonable expenditure?

A consistent approach should be taken to those items that may, or may not, be allowed when considering whether the bankrupt’s expenditure is reasonable. Items such as TV license, household and car insurance and car road tax are examples of what may be treated as part of the bankrupt’s domestic needs. As far as mobile phones are concerned, costs must be reasonable and it may be necessary to disallow part of the costs if they are excessive or only for social use. If the calls are largely work related, a check should be made whether the employer is reimbursing the bankrupt for those calls.


Items such as gym membership, private healthcare insurance and additional pension contributions to enhance a pension should not be treated as allowable unless there are extenuating circumstances.


As far as holidays are concerned, it is accepted that a bankrupt is entitled to a break from routine and some allowance may be made for a modest holiday. Luxury foreign holidays would be likely to upset creditors but an allowance for a cheap holiday of £60 - £80 per month, which would amount to £720 - £960 p.a., would seem reasonable for a family of four. Any extra would then have to be funded out of surplus income.

An allowance for clothing may be included in the calculation, particularly in families with children. What is reasonable may depend on whether smart clothes are required for work but any amounts in excess of £40 per month for an individual or £80 for a family should be explained. An allowance of £10 per month for adult hairdressing and £3 for a child is reasonable but any expensive hair treatments must be funded from surplus income.

After school clubs can be allowed if they are used to provide childcare whilst the parents are working but if used simply for convenience, it is up to the bankrupt to fund it. In the same way, it would seem reasonable to allow one extra-curricular class per child but any additional classes should be funded from any surplus income.

”NT” tax code Income Payments Agreements and Income Payment Orders

When a bankruptcy order is made against an individual who is subject to PAYE, HM Revenue and Customs (HMRC) applies a “nil tax” code to that person for the remainder of the tax year in which they were declared bankrupt and can then claim in the bankruptcy for the amount of tax which would have been collected (plus any other money owed for previous years), as long as the debtor does not change his/her source of income (i.e. gets a new job) during the tax year in which the bankruptcy order was made.

Where the new tax code is expected to be applied before the end of the tax year an IPA/IPO should be obtained. Where the bankrupt has signed the Tax and NI Disclosure Authority, an Income Payments Agreement (IPA) should be sought in preference to an Income Payments Order (IPO), to claim the extra money that the debtor receives.

An IPA/IPO can be made purely on NT tax code grounds and is not dependent on whether the debtor has any disposable income to make regular payments.

What happens if they stop paying?


- Could be a matter for Suspension of Discharge
- Go to court in cases of dispute
- Can get payments direct from employer (most are employees).


Varying, reviewing or discharging an IPA.

An IPA can be varied by written agreement between the parties. However, in the event that one party seeks a variation to which the other does not consent, for example, to enable the collection of arrears of payments where the individual subject to the IPA has defaulted from the agreement without cause, an application can be made to court for the agreement to be varied. Such an application may be made by the individual subject to the IPA, the official receiver or trustee. The court may order a variation of the IPA.

If the court orders that the IPA is varied so that a third party such as an employer is to make payments under the IPA to the official receiver or trustee, notice of the amended agreement must then be sent to that third party.

An application to vary an IPA may be made after discharge.

Can the bankrupt’s discharge still be suspended?

There is no reason why the official receiver may not apply to the court for an order suspending the bankrupt’s discharge if he defaults such an application could encourage the bankrupt to get the IPA back on track. However, as a bankrupt will be discharged generally within 12 months of the date of the bankruptcy order, this may not be a particularly effective way of seeking compliance. A better route may be to seek a variation of the agreement to allow for the payments to be made via a third party such as an employer.

Income Payment Order Questionnaire (IPOQ)

At some point during your bankruptcy you will normally receive an IPOQ.

It is vital that this is returned within the timeframe stipulated by the OR (normally 14 days).

This could be an indication that the OR may be looking to process an early discharge, and if the form is not returned within the timeframe, then the OR is not permitted to consider this action!!!

Also it may be that the OR is aware of a change in your circumstances, so must again review any IPA in place, or may have to consider starting an IPA. If you fail to return this IPOQ in the timeframe, the OR may have to consider an IPO, and you will have potentially lost a possible chance to reduce the likelihood of an imposed IPO

sandralovescats

flis21 wrote:

Couldn't seem to get the link to work, what is BRU/BRO? Some of my other half's debts are to do with gambling, although it was all fruit machine gambling, so his statements just show money being drawn out of the account. Would it be better not to mention that the money was spent on gambling?

There is a separate section of the SoA form that asks specifically about money lost on gambling. Have you looked at the https://www.insolvency.gov.uk website? You need to register and then have a look at the form. It takes a while to complete.

Good Luck!

rog2

sandralovescats wrote:

INCOME PAYMENT ORDERS/AGREEMENTS (IPO/IPA)

An excellent post SLC and should be compulsory reading for anyone considering bankruptcy - especially those who think that bankruptcy is 'the easy way out'.

You're obviously doing your homework:beer:

flis21

Thanks for that fab post Sandra, I have learnt alot about what to expect from it.

Very informative and helpful for people in our situation.

sandralovescats

No problem.

I know how hard it is - emotionally and mentally.

People think that we are trying to absolve ourselves in some way, trying to run away from our problems where money is concerned.

We are NOT!

Good luck