Urgent news on IPA's - Changes for BRs after 01/12/2010

fermi

Now confirmation on the IS site regarding taking ALL surplus.

http://www.insolvency.gov.uk/guidanceleaflets/ipoipa/IPOIPA.htm

Normally, you will be expected to pay all of your disposable income every month as your IPA or IPO payment. So the more disposable income you have, the more you will have to pay.

Cheers Tim for spotting that.

Example of a ‘nil tax code’ IPA

Say you are made bankrupt on 15 September 2010 and after all reasonable expenses are deducted, you have surplus income of £300 a month. Under an IPA or IPO you will be asked to make payments of this amount (£300 a month) for 36 months. If you are in PAYE employment, a nil tax code means that. the tax you would have paid (say £400 per month) is now available as additional surplus income, to be collected under the IPA or IPO In these circumstances you would pay £300 a month from the date the IPA or IPO began, for 36 months. You would pay an extra £400 per month (total £700 per month) during the period that HMRC gives you a nil tax code, up to and including March 2011 (about 6 months), when your tax code changes at the end of the tax year.

feelsolow

Apologises if my question sounds stupid but does that mean that this £20 allowance that was spoke of before no longer exists now?? This makes br seem even more scary that before. I'm still unsure whether to try and get my br before the 1st if I'm still classed as a new case because my OR interview is after the 1st Dec.

One of the positives that I did see that AA / RAC membership is now allowed if you are able to retain your car.

fermi

If you take this on face value, then going BR before the 1st won't help.

Example of a ‘nil tax code’ IPA

Say you are made bankrupt on 15 September 2010 and after all reasonable expenses are deducted, you have surplus income of £300 a month. Under an IPA or IPO you will be asked to make payments of this amount (£300 a month) for 36 months. If you are in PAYE employment, a nil tax code means that. the tax you would have paid (say £400 per month) is now available as additional surplus income, to be collected under the IPA or IPO In these circumstances you would pay £300 a month from the date the IPA or IPO began, for 36 months. You would pay an extra £400 per month (total £700 per month) during the period that HMRC gives you a nil tax code, up to and including March 2011 (about 6 months), when your tax code changes at the end of the tax year.

However, has the person who wrote that interpreted it correctly?

But September?

The lack of verifiable official info makes it very very hard to judge.

The sensible thing would be to draw a line based on BR date. Hopefully that is what will happen.....

fermi

feelsolow wrote: »

Apologises if my question sounds stupid but does that mean that this £20 allowance that was spoke of before no longer exists now??

Nope, doesn't necessarily mean that.

The old IPA/O factsheet made no mention of the old £100 threshold, but it was there.

feelsolow

Thanks For that Fermi - on a personal note - I won't rush to become br before the 1st now if it appears to make no difference

I read on here that there was likely to be more allowances for gym membership / emergencies / entertainment etc, but that doesn't seem the case from what is written there.

fermi

feelsolow wrote: »

Thanks For that Fermi - on a personal note - I won't rush to become br before the 1st now if it appears to make no difference

The problem is that it's ambiguous based on the limited information that there is.

I wouldn't like to advise people to rush, as it might not make a difference.

On the contrary, I wouldn't like to advise people that it's OK to hang back either.

Tupperware_Queen

feelsolow wrote: »

Thanks For that Fermi - on a personal note - I won't rush to become br before the 1st now if it appears to make no difference

I read on here that there was likely to be more allowances for gym membership / emergencies / entertainment etc, but that doesn't seem the case from what is written there.

The following are examples of expenses which are likely to be disallowed (unless there are special circumstances):

• Gym membership, any sports expenses or club membership
• Additional pension contributions to enhance a pension
• Private healthcare insurance
• Money for gambling, alcohol or cigarettes
• Satellite TV
• Excessive mortgage payments

Note: the official receiver will always consider your views about what is 'reasonable' or necessary spending for your circumstances.
Again, the list is not meant to be complete

From the insolvency website....so I don't think you can put a gym membership down at all. Personally I don't consider a gym membership essential..but thats perhaps cos I HATE the gym lol

Den78

The communication referred to by Debt Doctor states 'These changes should be applied to all new IPA/IPOs agreed on or after 1 December 2010' so it doesn't matter when your bankruptcy order is made, the important date is the date of your interview.

fermi

Den78 wrote: »

The communication referred to by Debt Doctor states 'These changes should be applied to all new IPA/IPOs agreed on or after 1 December 2010' so it doesn't matter when your bankruptcy order is made, the important date is the date of your interview.

Or the date that any IPA/O is agreed for the first time after that, if an IPA becomes feasible during the period you are undischarged and one wasn't set up at initial interview?

Which is also what I am now hearing from certain quarters.

In other words, even if you went BR earlier this year but are undischarged without an IPA having been agreed yet, then any IPA agreed on or after the 1st December would be subject to the new assessments.

Den78

Originally posted by Fermi

Or the date that any IPA/O is agreed for the first time after that, if an IPA becomes feasible during the period you are undischarged.

Which is also what I am now hearing from certain quarters.

In other words, even if you went BR earlier this year but are undischarged without an IPA having been agreed yet, then any IPA agreed on or after the 1st December would be subject to the new assessments.

If the vetting of your bankruptcy has been concluded, the main reason for it being reassessed is during the Early Discharge process, when you will be sent an IPOQ form to reassess your capability of agreeing an IPA. If the form is not returned to the Insolvency Service the only consequence is that you will not be granted early discharge.

Unless other information is brought to their attention it is unlikely that they will review your income/expenditure outside the early discharge procee.