what is the point to work hard when under bankruptcy and IPA?

kingdan

Hi all,

I went bankrupt yesterday and I have been doing some research regarding the IPA.

I believe, under the new IPA rule the OR will be taking 100% of my disposable income, so the more I earn/work hard or go for a promotion with more money, they will take it all anyway so there's not much point to do so in the next 3 years

I am thinking to go back to university to study my master degree since I am going to be poor and won't be seeing any of extra money, I might as well being a poor study and come out this mess with a master degree.

The question is, is the OR really going to take every single extra income I earn? and if so, this really discouraging people to work harder and surely less tax for the government and I am sure someone will just go on benefit, so each way you look at it this is a lose-lose situation for both parties.

Please share some experience and help me decide what to do.

P.S. Having the interview call tomorrow and a bit worry they are going to cut all my living cost on my bankruptcy form.

debtinfo

Well the idea of an IPA is to return as much money to your creditors and pay for your bankruptcy as possible whilst at the same time leaving you enough money to live on. If your question is solely what it does for you then the answer is not much.

The two concerns I always point out to people though are do you want to slow your career progression and show employers a lack of ambition by turning a promotion down, although I know career progression isn't the ultimate gosh for many people who are happy as they are.

The other is what will you be living off at uni

At the end of the day each person has to make their own decision and choosing not to work and contribute is a perfectly legal one. Unless the government changes the rules of course

Janie4Now

The OR will take income excessive to your needs to pay your debtors.

Why should you work? Self-esteem? Actually paying off some of what you owe? Improving your future prospects?

In fact, why shouldn't you work? I do. Sometimes I've had 2 or 3 jobs to make ends meet and to pay my debts.

I'm NOT being judgemental of your bankruptcy - many of us have been down that route - but I do take issue with the idea that you shouldn't do whatever you can to pay your debts and to stand on your own two feet!

kingdan

thanks for the reply but i think you might be misunderstood me.

I am more that happy to work. I have been working all my life and I have no intention to sit around and go on benefit for next 3 years.

I am just try to find a way to enjoy my life as much as possible in this mess i got myself into rather than feeling sorry for myself and hopefully i won't kill myself.

I just don't get the point why they decide taking 100%, if they stay at the old rule which is 50-70%, I believe people will work harder and try to get more money so he/she will be paying more toward to the IPA and still have some extra for themselves but the new rule has no incentive to do so. people will just do what they do for the next 3 years, so creditors will not see an extra penny over the IPA each month.

I like to think I am a responsible person and I am willing and happy to pay back the money I owe but not will work hard and see nothing at the end. I cant even save some money too see my mum and dad oversea.

As for the Uni, I might just get a part time job which just enough money to live, I believe IPA work both way, so if i earn more they took everything, so if I earn less they will suspend the IPA, so I do me no harm in this case. So I will have enough to live and study just like a poor student I used to be.

Or, I like to see this is an opportunity to find a job that I really enjoy to do even in a lower wage, because the amount of money I earn from now on does not really matter for next 3 years and if I have to live in this mess I might as well work for something I enjoy.

Lou67

Hi Kingdan. As far as I am concerned, when you go bankrupt, that's it, and no IPA should be issued IMO. It incenses me that if you earn a little bit extra sometime during that first year, (say through working more hours,) you can get lumbered with having to pay an extra £75 to £250 a month to pay back the creditors for up to 3 years! What is the point of going bankrupt if you end up being tied to paying back the creditors for up to 3 years?!

My husband had the chance to earn extra money when some extra hours came up six months after our bankruptcy, but he turned it down, because we didn't want to take that risk. A few months after discharge, another opportunity came up for both of us to earn more, and this time we took it, as we knew we were safe from any IPA.

If people (almost always people who have never gone bankrupt!) have the idea that bankrupts should pay as much as they can back to the creditors, even if it makes them struggle badly, that's up to them. I do not agree. IMO, once the amount has been bankrupted, that should be it.

What's more, our home was taken from us, and 65% of the debt with our creditors was paid off with the proceeds anyway. So as far as I am concerned, that is that's the end of the matter. We suffered for years, and struggled financially very badly, and we eventually had to go bankrupt as we had no choice. We lost our home and our financial security, and we have lost our excellent credit record which we had up to the age of 45. I think we have suffered enough! People should be entitled to make a fresh start and put the debt and all the hard times behind them, and they should not have to have it hanging on for another 3 years!

dojoman

If you don`t like the rules concerning BR, then simple, don`t go BR.

kingdan

I understand I need to pay some of the money but the new rule doesn't seems helping the situation and no me but I believe some people will simply go on benefit or work less for 3 years. I'm it will affect the country as a whole on benefit or work less mean less income tax for the government.

I just don't understand the people who made the decision of taking 100% was a better idea than the old system. So the only different between iva and bankruptcy is the time of the repayment. 3 yrs vs 5yrs.

I might just go travelling for 3 yrs and see the world then come back start fresh again in 3 yrs time when I am older and wiser.

debt_doctor

Hi,

I completely agree with the idea that the 'new regime' is too harsh - it's why I have not agreed to one single IPA proposal on behalf of a client since Dec. 2010 - and I never challenged one single IPA proposal before that date.
Anyway, back to you. You can choose any of those options you mentioned. Also just to be clear, if you are discharged from BR with with no IPA, then thats it- so up to 1 year from your BR date- you seem to be quoting 3 years, which is the time period if an IPA actually starts.

DD

sniggings

I agree with the OP, they are making it less likely for people to want to work harder or better themselves.

This question came up once before and Debtinfo produced a list of figures to show that since the rule change, more has been raised for creditors through the new changes, I'm not so sure if the figures he listed gave the full picture, as I would think claiming £20 from someone a month is costing more to collect than it raises, add into that the loss of tax revenue, benefits paid to those that stay on benefits for the year or don't take extra work, I think the true cost of this will be bad for the tax payer and bad for the BR, maybe the creditor does slightly better out of this system but at the cost to the tax payer.

truegemini666

question for dojoman have u ever gone bankrupt ? yes there are rules for bankrupts as in if u have excess income then you have to pay it back via ipa i also think that once you have gone bankrupt then that should be the end of the matter not be saddled with paying it back if you have excess income for 3 years.

kingdan

Debt doctor or anyone who know the answer.

I was told the IPA is 3 years so I have to keep paying till it finish, isn't it true? Or after one year I will be free? How the ipa actually work? Any chance it won't last for 3 years?

I am having my interview tomorrow and on my former I put down income 1344 and cost of living 1300 so what is likely to happen? And I always have extra hrs each month and it is about extra 200. I will tell the interviewer about it tomorrow but how the ipa gonna be written because those extra is not always available.