What happens after bankruptcy when your circumstances improve?

Sandwich

From what I understand, when you declare bankruptcy you are placed on a IPO or IPA, provided that you have a certain amount of disposable income each month.

What I'd like to know is, once the IPO is worked out do the payments stay at the same level for the duration of IPO (i.e. the full three years), or do the payments change if your circumstances change and your income increases?

If it's the latter, then is it necessary for all of your extra disposable income to go towards paying off your debts, or is it just a certain percentage of your extra income that has to be given up?

mazman83

The amount you pay can go up as well as down, depending on your circumstances, so its not a fixed amount.

When your income changes you will be asked to submit another SOA and they will re-evaluate your payments. Unless your only income is from benefits only then 100% surplus will be taken.

threestoreymadness

Sorry for sounding thick. If you have everything worked out and you dont have to pay anything and you get discharged say after 9 months can you then go on and earn whatever without then having to pay an amount per month. What is the 3 year relevance if you get discharged after approx 9 months/1year??

mazman83

If you are not given an IPA before you are discharged then you will never have one and everything you make is yours to keep.

If you enter into an IPA then it will be for 36 months max from the date it was signed.

So even after discharge you will have to make payments for the duration of the IPA.

If circumstances change and there is no surplus to take then you wont pay but it still counts towards the remaining months.

Sandwich

mazman83 wrote: »

If you are not given an IPA before you are discharged then you will never have one and everything you make is yours to keep.

If you enter into an IPA then it will be for 36 months max from the date it was signed.

So even after discharge you will have to make payments for the duration of the IPA.

If circumstances change and there is no surplus to take then you wont pay but it still counts towards the remaining months.

Ah, so the IPA/IPO isn't necessarily something that will have to be set up if you declare bankruptcy?

How can you avoid having to make payments into an IPA/IPO?

mazman83

No, an IPA would only be given if there is a surplus of more than £20 after all living expenses have been allowed for.

Have a look at the below for more details

Income Payment Agreements/Orders.

• Income Payment Agreements & Orders
• Urgent news on IPA's - Changes for BRs after 01/12/2010
• Tech Man - IPO / IPA (Income Payment Orders and Income Payment Agreements) (IS)
• Nil tax (NT) coding/IPAs (MSE)
• Annex A – Assessment of real disposable income where the bankrupt's income is derived in part from state benefits
  Annex B - Guidance on the assessment of real disposable income where the official receiver seeks to claim a lump sum payment
• Income payment - Household spending
  Spreadsheet showing average UK spending calculated from the Office of National Statistics publication ‘Family Expenditure Survey’
• IPA calculator Pre 01 December 2010
• IPA calculator Post 01 December 2010

JCS1

Sandwich wrote: »

Ah, so the IPA/IPO isn't necessarily something that will have to be set up if you declare bankruptcy?

How can you avoid having to make payments into an IPA/IPO?

You can't avoid having to make payment (only those whose sole income is benefits won't be considered for one), if the OR deems you have a surplus they will ask you to pay in IPA (Income Payment Agreement). if you disagree with the figure, they can take you to court and ask the judge to make a decision (Income Payment Order)

Sandwich

JCS1 wrote: »

You can't avoid having to make payment (only those whose sole income is benefits won't be considered for one), if the OR deems you have a surplus they will ask you to pay in IPA (Income Payment Agreement). if you disagree with the figure, they can take you to court and ask the judge to make a decision (Income Payment Order)

So basically, unless all of your income is from benefits then you will have to pay into an IPA?

JCS1

Sandwich wrote: »

So basically, unless all of your income is from benefits then you will have to pay into an IPA?

If there is a surplus after reasonable domestic needs have been met, then yes. Why don't your post up your SOA so we can offer guidance on what would be allowed?

Tupperware_Queen

Sandwich wrote: »

How can you avoid having to make payments into an IPA/IPO?

Herein lies an issue...some people (not necessarily the OP), see bankruptcy as a way of just getting out of debt 'easily'. It's not an easy decision, it can have ongoing implications for years. When I went into bankruptcy my life was a total mess, and I knew that BR was the only option. I wasn't trying to avoid paying my debs...there was just no way that I possibly could. I submitted my SOA and was willing to accept whatever the OR felt was reasonable. Allowances in BR are generally more generous than other debt management options. I would suggest that everyone submits their honest SOA to the OR and await their response. If you can honestly and reasonably justify your expenses the OR will accept them...my fuel and car costs were very high because I use my car for work..I was able to give a breakdown of this and it was accepted without any problem.

Be honest, don't try to 'fudge' the figures, if you do it will only come back and bite you on the !!!!...however do make sure you consider all aspects of your budget, eg clothing, haircuts etc things which are often neglected.

debtinfo

I couldnt agree with you more TQ