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

NekoZombie

Hardupandfedup wrote: »

Im confused! I have read on here that any changes will be delt with under the new rules is this right or wrong please.

No need for confusion!

All IPAs set up before 1 Dec 2010 will continue to run and operate under the old system. If any changes to the IPA are necessary, now or in the future, then changes will be made still allowing a surplus of £99 or less.

All IPAS set up after 1 Dec are subject to new rules, namely only allowed a surplus of £20

davidgmmafan

Are there any plans to highlight this or protest to MP's and the like?

Disgusting how they hit the people least able to do anything about it. I don't for one second expect our wealthy leaders to know, or care, about this.

I do have a hunch, and hope, that the people implementing this will be conscious that they have a job to do and that these are guidelines not rules. In other words if they stick rigidly to the rules they are going to be swamped with work reassessing whenever stuff goes wrong. If it were at all possible and I were in this job I'd probably scrutinize expenditure less to ensure the bankrupt would be able to cover unexpected expenses.

Will be looking out for updates to see how it went for people under the new rules. Disappointed this is not in the meida that I can see.

Finally point how can it be that there aren't enough people going bankrupt? Failry often you see headlines saying the numbers have increased. I guess it could be with DRO's and IVA's insolvencies are high but BR is lower...

fermi

Guidance issued last week.

Technical News item: Bankruptcy: Revision to the way in which Income Payment Agreements (IPAs) and Income Payment Orders (IPOs) are sought.

Type: Case Administration
Issuer: ORBS
To: All A2s and above

Following consideration by the Directing Board, the way in which the amount sought under an IPA or lPO has been amended. These changes should be put into effect from 1st December 2010 for all cases where a new IPA/IPO is sought. Existing IPA/lPOs will continue under the present arrangements as will any subsequent variances throughout the lifetime of all existing agreements/orders.

The changes are:

• The minimum amount that the official receiver should seek to claim under an lPA or IPO has been reduced to £20,
• The bankrupt will also no longer retain any of the remaining surplus once all their reasonable household expenditure has been accounted for.

These changes should be applied to all new IPA/lPOs agreed on or after 1st December 2010. Guidance is given below with regard to their application in respect of existing IPAs at that date.

Identifying surplus income.

When assessing the expenditure claimed as essential by the bankrupt, the official receiver should always consider each case on its own merits. A decision should be made as to whether the expenditure is realistic, relevant and appropriate to the bankrupt's circumstances and whether the amounts included are sufficient to provide for the reasonable domestic needs of the bankrupt and his/her family. The Household Expenditure Spreadsheet (HES) which provides average expenditure statistics available for various household groups, based on the most recent Office of National Statistics figures is available on the Intranet. Chapter 31 of the technical manual has also been updated to reflect the changes in approach. An updated lPA calculator will be on the intranet from 1st December.

Removal of the retention of any surplus.

As the bankrupt will no longer retain any surplus, an accurate but reasonable assessment of income and expenditure is all the more important. It is recognised that at lower levels the assessment can be at the margins. For that reason a provision of £10 per month, per dependant household member should be allowed to cover sundries and emergencies in all cases. For a married couple with 2 children, this would equate to £40 per month. There are no other changes to existing guidance in the Technical Manual as to how reasonable domestic needs should be assessed.

Maintaining a consistent approach.

Although the individual circumstances of every case will be different, the official receiver must try to maintain a consistent approach when considering the expenditure claimed by the bankrupt. During the interview a meaningful dialogue between the bankrupt and examiner must be entered into to ensure that the provisions are applied consistently and equitably.

If a bankrupt's expenditure appears to equate exactly with his/her evidenced income, leaving no surplus the expenditure should be carefully examined and tested against guidelines provided in the HES and chapter 31 of the technical manual. Particular care should also be taken where the debtor appears to have had assistance from a commercial organisation in the completion of their statement of affairs as a set of pro-forma outgoings may have been included which are not necessarily expenses actually incurred by the bankrupt on a day-to-day basis.

Where the bankrupt states that the continued payment of certain expenditure above that considered reasonable by the official receiver is required to meet the reasonable domestic needs of the bankrupt and his/her family, further information detailing the extenuating circumstances justifying why they consider this an essential expenditure should be sought. Chapter 31 of the technical manual provides further guidance on this.

Calculation of contribution to be claimed under an IPA or lPO excluding the retention of any surplus.

In all cases where the initial assessment of whether or not an lPA/lPO is appropriate takes place on or after 1st December 2010, the full amount of surplus income if above £20 should be sought by way of monthly payments under an lPA (or and lPO if an IPA cannot be agreed). This includes any cases which were initially assessed at nil but in which a further assessment is made, for example as part of the early discharge process.

Application of new minima to existing IPA/lPOs reviewed following a change in circumstances.

Except with regard to applying the lower minima (see below) the basis of any re-assessment of existing IPA/lPOs as at 1st December 2010 will be that under which it was first agreed ie the sliding scale for the retention of the surplus be retained.

If upon review the amount available falls below £50 but is above £20 that amount will be taken and the IPA amended accordingly.

If the amount of the monthly IPA payment was previously set at the minimum amount of £50, when calculating the reduced amount the bankrupt can now afford, the bankrupt should be allowed to retain the full surplus (£50) allowed originally. For example if originally the surplus was £100, they would have retained £50 and the IPA would also be £50. If at the review the surplus is now £80, the IPA should be adjusted to £30 to allow them to retain the £50 surplus originally agreed.

If the monthly amount collected prior to the IPA review was greater than £50 the existing provisions apply in that the percentage scale of the amount to be collected should be applied in the same way as when the IPA was originally calculated, using the 50-70% contribution rate. However the amount of the surplus retained by the bankrupt should not fall below £50. For example, if upon review there is a surplus of £70, an lPA or £20 should be sought and the bankrupt be allowed to retain £50.

Other matters

Amendments are being made to the ''Technical Manual'', the ''Case Help Manual'', lPA calculator and publicity material, as appropriate.

davidgmmafan

This bit gives me hope, and is exactly the sort of wiggle room I would be looking for if I were the person doing the assessment.

"As the bankrupt will no longer retain any surplus, an accurate but reasonable assessment of income and expenditure is all the more important."

debt_doctor

fermi wrote: »

Guidance issued last week.

You've made that very tidy - good idea to take the issuers e-mail address off !;):D

DD

fermi

debt_doctor wrote: »

You've made that very tidy - good idea to take the issuers e-mail address off !;):D

DD

I though it was perhaps wise.

Falze

If i had no IPA and was offered ED, i would not be keen to complete a new SOA.

If the 1/12/10 date relates to when the IPA is agreed and has nothing to do with the actual BR date. Thats if i read correctly.

alastairq

Identifying surplus income.

When assessing the expenditure claimed as essential by the bankrupt, the official receiver should always consider each case on its own merits. A decision should be made as to whether the expenditure is realistic, relevant and appropriate to the bankrupt's circumstances and whether the amounts included are sufficient to provide for the reasonable domestic needs of the bankrupt and his/her family. The Household Expenditure Spreadsheet (HES) which provides average expenditure statistics available for various household groups, based on the most recent Office of National Statistics figures is available on the Intranet. Chapter 31 of the technical manual has also been updated to reflect the changes in approach. An updated lPA calculator will be on the intranet from 1st December.

Removal of the retention of any surplus.

As the bankrupt will no longer retain any surplus, an accurate but reasonable assessment of income and expenditure is all the more important. It is recognised that at lower levels the assessment can be at the margins. For that reason a provision of £10 per month, per dependant household member should be allowed to cover sundries and emergencies in all cases. For a married couple with 2 children, this would equate to £40 per month. There are no other changes to existing guidance in the Technical Manual as to how reasonable domestic needs should be assessed.

So..as was always the case, individual expenditures can be negotiated to reflect personal circumstances.....

The 'emergency' provision may also compensate somewhat for the loss of surplus....indeed, on my own SOA, I did not claim for 'emergencies'...was not aware of it being acceptable at the time....I still had sub-£30 surplus, anyway....


For a large family, this emergency allowance may well equate to a greater figure than could have been claimed [surplus] under older guidelines...?

These changes may well result in far more frequent consultation between OR and BR...if a costly emergency [such as a boiler repair] cannot be met other than by utilising the IPA payment, then is it possible for the affected BR to negotiate with the OR to 'allow' this sum to be so utilised, for the repairs?

After all, I doubt any OR would wish to leave a BR household without heat or hot water, would they?

wolfers

Falze wrote: »

If i had no IPA and was offered ED, i would not be keen to complete a new SOA.

If the 1/12/10 date relates to when the IPA is agreed and has nothing to do with the actual BR date. Thats if i read correctly.

This is my concern. My surplus on my original SOA was under £20 and in my OR interview he said that he's be recommending me for ED and I should expect to hear from him again in October (I went BR in June).

Well, I've heard nothing from him since but have been hoping that I'd get ED.

Now I'm hoping I never hear from him again and that I can just sit quiet and patiently await my AD.

My circumstances have changed marginally, though the net effect is to slightly reduce my surplus to even more under £20. That being said, I wouldn't want a huge line-item discussion with an OR intent on getting an IPA out of me.

The change does seem unfair to me because there was so little warning, there's so little official information and it's such a huge change from the previous position. I do think (well, obviously!) that if you went BR before 1/12/10 you should be subject to the old rules because they were part of the decision-making process when I went bankrupt. We are told to get advice and the advice I got explained that if my circumstances improved I'd still get to keep some of the surplus. The new rules represent a massive drop in what you can keep compared with the position explained to me when I finally decided to bite the bullet. I'm now in the position of deliberately not wanting my circumstances to improve because it will cost me so much in terms of the IPA that would result from it. It makes sense for me to keep my head down and make no effort to improve my financial circumstances until my AD. If I do get an IPOQ (is that the right acronym?) I will be very careful in putting my budget together so as to avoid an IPA simply because if I fail to do so I will be living on a very tight budget for another three years. A year of that discipline is probably good for me, but a further three years will be a real strain and will prevent me from planning for my future, e.g. saving a deposit for a mortgage or building up a pension.

Yes, I've been released from my debts and the stress that went with them, but I only did what the banks and the law allowed. The reason why banks borrow money at 0.5% and lend it out at 15.9% is because they build into their business model defaults from people like me. I didn't set out to default: I genuinely thought I'd be able to pay the money back and, indeed, I was repaying the banks at the rate of £10,000 a year, which was half my income after tax at the time. Had my life not suddenly collapsed I would have continued to do so.

Instead of checking the post each morning hoping for a letter from the OR, I'm now checking it hoping that I don't hear from him.

onward

I see that these new guidelines/rules have been passed to all OR's...but what about independent Trustees?

My case was passed over to a Trustee (I assume because one or more of my creditors demanded it) who are essentially an independent recovery firm, and they deal with my case (i.e. I submit changes of circumstance in I&E to them now, not to the OR).