Advice about IPAs please

BreatheEasy

Hi all, new guy here looking at BR in the very near future and trying to get my head around it all.

First off, I've been lurking on here a fair bit and I just have to say that some of the threads have put tears in my eyes (in a good way)! It's true what they say about adversity bringing out the best in people!

OK so briefly: redundancy has put me in this dreadful position, although I was struggling before losing my job. I owe about 35k (cc/loan) but I'm currently on benefits so I understand that post bankruptcy the effect of any IPA should be minimal...

However I don't intend to remain unemployed and I'm looking at taking my skills into a self employed arena and really making this a whole new start. If it works my income will probably vary a great deal initially so I'm wondering how that will affect my situation and how that will go down with the powers that be..? Basically, what happens in a variable income situation once earnings start to go above my £70/week state benefits?

Thanks in advance.

BreatheEasy

OK so after trawling the board for the last couple hours it seems I definitely won't be subject to an IPA while on benefits, and if that situation remains won't be subject at all once my BR year is up. On the face of it I should just keep my head down for a year, but I'm not one to sit on my hands so will probably make a go at freelancing and make a stab at some minimal earnings, so my next question: if my 'minimal earnings' are much the same as benefits do I still have to inform the OR?

debtinfo

You have to inform the OR if you have any earnings, whether you get an IPA or not will depend on if those earnings outweigh your allowable expenses, if yhe earnings are very up and down then the OR will usually take an average

Ineedaname

If you start earning and some of your income is made up of benefits and some earnings then all of your income can be used to assess you for an IPA. However, the OR can only take surplus which is made up of earnings income, they still cannot touch any benefits.

Also consider that as a self employed start up you will have a lot of initial costs which can be taken out of the turnover, leaving you with less net profit to pay tax on. The OR will assess your net income, that's after business expenses, tax and NI. Many new businesses do not provide an income for several months...

So it's still worth you investigating being self employed now, rather than waiting until after discharge. Speak to a relevant advisor at the Job Centre to find out what help is available to you, both financial and support wise, sign up to the Business Link website and follow their guides, attend HMRC free tax courses too. All this you can do to help you understand if your business idea is viable, without it affecting your BR!

Obviously your BR will have an effect on the business, pre-discharge you will not be able to open a business bank account, post-BR options are still limited but there are a couple available to you. Obtaining a start up loan will be next to impossible and credit from suppliers very difficult. Even setting up as a limited company appears not to solve the credit situation as members have recently reported their personal BR status as a sole director being an issue for accessing credit for the Ltd Co.

But it all depends on what type of business you wish to enter into as to whether it's possible. If you are planning on selling 'services' rather than goods I think your chances will be better as you won't need much money to start up or keep running day to day.