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

debtinfo

The point i think we need to make is that there has been no rule change, just a guideline change, The advice given really always should have been that the law allows them to take all surplus (for instance private trustees have always been able to take a larger amount) but the OR usually only takes 50-70%. Unfortuately and presumably because it would take a long time to fully explain all the rules, it has usually been advised that 50-70% is the rule and not the guideline. Therefore because no rule change has happened and because the IS strictly does not advise you it has not been necessary to give notice.

wolfers

I used to be a lawyer (boo! hiss!) and I think a case could be made here. Whatever the status of the changes, they are still changes. Bankrupts are required to get advice and that advice (until a week ago) was based on the historical practice of the IS. That practice has now changed -- dramatically so -- and to the clear detriment of people who took decisions based on the previous practice. I think those people who went bankrupt after 1st December 2009 and who were not given an income-based IPA can legitimately feel aggrieved if, at some point before their discharge, they are given an IPA on the new terms.

What we don't know is how likely it is that any such bankrupts will be given such IPAs. If such a bankrupt were willing to play hardball I wonder whether the IS would risk seeing it through.

Tupperware_Queen

to be fair, when I was getting advice from the CAB, I was told that in theory the OR could ask for about 60-70% of any surplus, but that the exact amount would depend on the individual OR.

I worked out my SOA as accurately as I could, (given that I had moved house the day before, so wasn't sure of council tax, water rates and fuel bills for the new place - I based it on my previous costs). When I had done, the CAB advisor suggested a few amendments, adjusting a couple of figures to give a little bit of leeway. This resulted in me having a £57 surplus, she advised me that it was possible I'd get an IPA based on that. Almost 4 weeks into BR and I have not heard anything, so hope that means I do not have to do one, but if I do, thats the rules, and I will have to stick by them.

I suppose it depends on whether the person advising you told you what could happen, or what usually happens....

wolfers

For me the issue is one of fairness. I think the new rules are very harsh and run counter to my understanding of the spirit of the Enterprise Act. But if they are the rules, they are the rules. Yet fairness surely demands that clear notice is given of the change and that it is not applied retrospectively.

debtinfo

But as i say the rule has not changed an IPA is only in force if agreed to and any IPO would have to be given by a judge, regardless of what the OR's own internal policy (and remember that this policy never applied to IP's) the judge will set the IPA in accordance with the rule in the enterprise act. All that says is that the IPA/IPO cannot be given such that the the bankrupts income would drop below their reasonable expenses. That is what any court will make a judgement on

WLITC

wolfers wrote: »

I used to be a lawyer (boo! hiss!) and I think a case could be made here. Whatever the status of the changes, they are still changes. Bankrupts are required to get advice and that advice (until a week ago) was based on the historical practice of the IS. That practice has now changed -- dramatically so -- and to the clear detriment of people who took decisions based on the previous practice. I think those people who went bankrupt after 1st December 2009 and who were not given an income-based IPA can legitimately feel aggrieved if, at some point before their discharge, they are given an IPA on the new terms.

What we don't know is how likely it is that any such bankrupts will be given such IPAs. If such a bankrupt were willing to play hardball I wonder whether the IS would risk seeing it through.

ITA, I would love for someone to challenge this, I'm sure the odd person will, but sadly most will fall in line. Hopefully if one of the cases goes to a judge and sets a precedent in favour of the us as opposed to the IS then they may be forced to revise current guidelines. If that does happen, then things will get very messy .. OR will have to be simultaneously working from three different sets of guidelines. I'm just hoping that get through to AD in the spring without the need for any reassement as I currently dont have an IPA and with these horrendous changes in place, I plan to do all I can to maintain the status quo until discharge.

PNPSUKNET

what you have to take into account, although the ipa will be higher to pay you are having thousands written off so less to pay out in the long run.

sealsandsqueals

I do understand that I to play by rules and will be eternally grateful that I could go BR. But I do think I'm one of the unlucky ones that got caught up in the middle of this.

I went BR way back in August and STILL haven't heard about my IPA, I was told the approximate amount of my IPA in my OR interview in September and it is quite large as I live with my parents and so my outgoings are very small - the main reason I went BR was so that I could move out and move on with my life - I was hoping to use my surplus to save up enough money to do this - but it looks like I may not have any surplus now - the OR will actually end up taking over 65% of my wage for three years and they'll get around £15k in equity from my house - which will all equate to the amount I owed in the first place - so surely if this was the case then I would never have been advised to go BR in the first place?

Should I contact my OR and chase up the IPA or just keep quiet and hope for the best.

Also, what happens if I don't accept the IPA and end up with an IPO - in the grand scheme of things does it make any difference?

wolfers

PNPSUKNET wrote: »

what you have to take into account, although the ipa will be higher to pay you are having thousands written off so less to pay out in the long run.

I'm afraid I don't share that viewpoint. To me it smacks of "bankrupts are bad people and deserve what they get".

How far do the rules have to change before you will regard them as unfair. What if the IS changes policy to this: Bankrupts expenditure shall be limited to the value of the state benefits they would receive if they were not in employment. Any surplus over this amount shall be deemed as non-essential and will be subject to an IPA for three years. Hell, let's make it five.

Your argument that the bankrupt would still have had thousands of pounds of debt written off still applies, so where is the line drawn?

Those who are currently BR but without an income-based IPA should be bound by the rules/regulations/guidelines/historical practice that applied when they went BR. Changing the rules halfway through is not fair and it is no justification to say "well, just look at how much you got away with when you went BR".

I think an application for judicial review would get a sympathetic hearing from a court. You cannot change the rules halfway through the game.

debt_doctor

wolfers wrote: »

I'm afraid I don't share that viewpoint. To me it smacks of "bankrupts are bad people and deserve what they get".

How far do the rules have to change before you will regard them as unfair. What if the IS changes policy to this: Bankrupts expenditure shall be limited to the value of the state benefits they would receive if they were not in employment. Any surplus over this amount shall be deemed as non-essential and will be subject to an IPA for three years. Hell, let's make it five.

Your argument that the bankrupt would still have had thousands of pounds of debt written off still applies, so where is the line drawn?

Those who are currently BR but without an income-based IPA should be bound by the rules/regulations/guidelines/historical practice that applied when they went BR. Changing the rules halfway through is not fair and it is no justification to say "well, just look at how much you got away with when you went BR".

I think an application for judicial review would get a sympathetic hearing from a court. You cannot change the rules halfway through the game.

I agree. I think this situation is unfair. Even though the 50 - 70 % is / was a 'policy' or 'guidance,' that could well be enough to mount a challenge upon. For instance, I often have to use the homeless legislation and the local authorities'code of guidance' that goes with it.
In the past when an LA worker has said to me "It's only a code of guidance" my answer has been "Yes, a guidance that has been upheld in many parts by Judicial review" -they soon back down!

I think the past reliance on a 'policy' could be challenged in the same way.

DD