Another IPA Question

darkbananaman

Trying to understand this. As soon as an IPA starts it runs for 36 months? If this is the case is it worth taking action to avoid one starting in the first place? My problem, rental coming in from tenents in second home which will start an IPA - this home will be repossesed when I become bankrupt anyway due to mortgage company and/or money going to IPA instead of to mortgage company (i.e. not enough money to pay mortgage). Therefore, is it better to kick the tenants out before I go bankrupt and therefore stopping an IPA in it's tracks?

sniggings

I would say yes but am not sure the rental will be classed as your income as if it is coming from a property that is either being reprocessed it will not be counted or the house will have to be sold so again will not be counted as income as any monies will go into your BR estate and not to you.

But for an easier life it may be better to tie up all loose ends before BR, just make sure you do not do anything that may look like it is designed to cheat the money your BR estate will be entailed.

sniggings

oh and to answer your other question, yes it's a total of 36 months from when you sign the agreement.

kation

In brief yes.

The OR will treat the rental income as your income, and you will be stopped from paying the mortgage on the 2nd property (so it will get repo'd).

So it is likely your tenants will lose the rental at some point (could take months).

It is in your interest in the long-term to avoid an IPA, but not your creditors.

sniggings

kation wrote: »

In brief yes.

The OR will treat the rental income as your income, and you will be stopped from paying the mortgage on the 2nd property (so it will get repo'd).

So it is likely your tenants will lose the rental at some point (could take months).

It is in your interest in the long-term to avoid an IPA, but not your creditors.

if reprocessed or if the house is put in the BR then any money/rent will not be the Op's but the bank/OR's, I can't see how it could be classed as income.

darkbananaman

Thanks for the responses. So an IPA will be triggered which will then sit with me for 36 months. I am on a low wage at the moment and if it wasn't for this rental I could probably scrape through without an IPA for a year and then get a better job after 12 months (after discharge - at this stage an IPA cannot be started anymore). My plan was to wait a year until discharge and then get a better job but this IPA started by the rental income with mess it all up. In 12 months time I would get a better job and ALL my disposable income would go to the IPA for a further 2 years?? Is this right in what I am saying?

fermi

sniggings wrote: »

if reprocessed or if the house is put in the BR then any money/rent will not be the Op's but the bank/OR's, I can't see how it could be classed as income.

It's not as far as I know.

31.11.13 Interaction with income payment agreement/order (IPA/IPO)

All income receivable on an investment property forms part of the legal and beneficial interest that will vest in the official receiver if he/she becomes trustee of the bankrupt’s estate. Investment income which forms part of the estate cannot be treated as the bankrupt’s income for IPA/IPO purposes as it will vest in the trustee and should therefore be collected by the official receiver upon appointment as trustee. All rent and other income from an investment property should be collected in full by the official receiver and should not affect any IPA/IPO calculation.

sniggings

how can rent from a property you no longer own after BR, be kept by you or classed as your income.

edit, fermi beat me to it, but as I thought it won't be classed as income.

darkbananaman

fermi - thanks for that info I will be able to sleep tonight, if that is right you are a star. Should I double check this with nationaldebtline?

debtinfo

rental income is not your income it is income from an asset and belongs to the trustee and so takes no part in an IPA calculation.

But fermi already said that:D

darkbananaman

Cheers debtinfo that was the best bit of news I've had in a while really cheered my up. Thanks for clarifying.

I have another dilemma. Basically I live cheaply at the moment, staying with friends I pay only small rent £400 a month. This includes all bills/council tax, etc. Thing is I will need to move soon as they are selling the house. Will the IPA calc be based on my current situation. If I tell the OR I am having to move which WILL be more expensive for me will they hold off on doing the IPA. I am looking for somewhere else at the moment but intended to file my papers next week. What u reckon? The cheapest I can rent round here is probably £560 a month which obviously is a huge difference. Oh and that doesn't include bills.