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

sniggings

once given an IPA it lasts 3 years, it can be stopped if your income drops within the 3 years but will start again if your income increases, the stopped period counts towards the 3 years.

What Debt doctor was saying is, if an IPA was not given whilst undischarged in the first year, an IPA can not be given later, i.e after discharged.

sniggings

depending on your rent, you might not get an IPA on £1300 a month, as for overtime, my OR said if it was just now and again then she wasn't concerned about it would be if it was nearly every month.

So if you do overtime quite a bit your OR will likely ask for an average income over say 6 months then see if an IPA is warranted on that income, it sounds bad but there is little point in doing overtime if it gets you an IPA or on an IPA.

kingdan

So basic I can't really plan anything until after the interview and see what the OR want to do to my finance first and let me get this one right, if my income do go down he/she will suspend the ipa and it will count as the 3 years time limit so the ipa won't last for 4/5/6 years or forever, right.

alastairq

In the end, much depends on personal viewpoint regarding career progression, etc.

The concept of not paying anything to creditors following BR rather defeats the whole object of bankruptcy...and that is, for an Official receiver to realise the assets of a bankrupt individual, for the benefit of creditors.

That is why BR works, and why it is such a powerful legal tool.


As such, it is not a tool for wiping all debts at a stroke.

It is a tool for ensuring all creditors get a relevant proportion of the value of a BR's assets....in return the BR is protected from any further actions by any creditors.



Also, it has already been pointed out in other threads that touch on this subject, but....often with an increase of income, or career improvement, comes an increase in living expenditure.

Thus, during a BR period, the SOA can and should fluctuate to reflect changes in living expenditure.

SO, the simple act of improving one's career path doesn't necessarily mean there will be a surplus of income.



But, with all this argument, has anybody considered what the alternatives to bankruptcy might have been?


If an improvement in income could be achieved, might this not lift the amount of free cash available to pay creditors?

Which might obviate the need for bankruptcy as a method of dealing with debt?



The allowances for 'reasonable living expenditure' under the Insolvency Service rules are quite generous compared to the allowances under benefits, or, even. following a Court Order....where the Order is based upon the income/expenditure of the person being ordered against?


The latter may well be the route followed should a debtor chose not to petition BR....



BR allows a debtor the opportunity to start afresh, free from the burdens associated with prior debts.

The nature of BR means there is a hiatus in the financial and domestic affairs of the BR....for the duration of the investigations.

This hiatus needs to be accepted as part of the process....and can affect more than just the way income is achieved.

It is the 'hidden ' price we have paid.


What each individual BR needs to come to terms with is, will a career improvement or an income rise during the period of being undischarged, be really worth the candle in the long term?

Will such improvements during the course of an IPA/IPO make so much difference in the long term, such that the increase in payments under an IPA/IPO won't really matter for the moment?


I think before we get tied up with what is or is not fair under the rules of Bankruptcy, we should consider what might have been the scenario if BR had not been petitioned?


I suggest, operate within the rules....but at the same time, use the rules to work for us.


As Debt Doctor has so succinctly put it.....?

ILW

Do bankrupts generally feel no wish to try and pay as much as they can to their creditors?

debtinfo

kingdan wrote: »

So basic I can't really plan anything until after the interview and see what the OR want to do to my finance first and let me get this one right, if my income do go down he/she will suspend the ipa and it will count as the 3 years time limit so the ipa won't last for 4/5/6 years or forever, right.

Yes thats right, during the 3 year period you are only expected to contribute if you are able to, that is one of the big differences between a bankruptcy and an IVA.

alastairq

ILW wrote: »

Do bankrupts generally feel no wish to try and pay as much as they can to their creditors?

The purpose of bankruptcy is to settle the debt situation once and for all.

The Law already ensure that every bankrupt individual pays as much as they can to creditors, because the Appointed Officer [the receiver] has a duty to realise the assets of the bankrupt individual for the benefit of those creditors.



Before you enter into a moralistic argument about 'paying creditors [who are already paid with everything the debtor has got].....consider 'stoozing?'

[or whatever it's called?] which is advocated by this very site?

In other words, the act of 'borrowing' money from one creditor, then shifting that balance around between other creditors to pay less interest.

In other words, I want to borrow that money, under those terms, but now I don't want to pay so much back, so I'll fiddle around with the system to avoid paying so much.

Apparently perfectly acceptable a course of action when borrowing money?

mildred1978

alastairq wrote: »

Before you enter into a moralistic argument about 'paying creditors [who are already paid with everything the debtor has got].....consider 'stoozing?'

[or whatever it's called?] which is advocated by this very site?

In other words, the act of 'borrowing' money from one creditor, then shifting that balance around between other creditors to pay less interest.

In other words, I want to borrow that money, under those terms, but now I don't want to pay so much back, so I'll fiddle around with the system to avoid paying so much.

Apparently perfectly acceptable a course of action when borrowing money?

You obviously don't understand stoozing AT ALL.

You never stooze anything with a positive interest rate, nor do you alter the terms of the lending. You borrow at 0% (although there may be a fee for doing so) and invest at a positive rate. For example I stoozed £15k and stashed it in my offset mortgage, thus earning the equivalent of more than 6% on it. The money sat there until the 15 month interest free period was over, at which point it was returned to the card company. How is that in any way similar to going bankrupt?

As for the argument that the OP will be poor for 3 years, gave you seen the allowances made under bankruptcy? They're obscene!!!

debtinfo

sniggings wrote: »

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.

Well the way it works for the uninitiated is that the IPA is administered by Moonbeever who carry the costs of collecting. They get a percentage of each pound paid and as such the OR receives the same proportion of the IPA whether the costs of collecting are low or high, one of the reasons that it made finacial sense to make the change and why the total income is from IPA's has increased despite the falling case numbers.

That is good for bankrupts.What? i hear you cry, how can that be good bankrupts? Let me explain. As many will know a large section of the IPA take actually goes to the Insolvency service fund rather than to creditors. That is the way the system us set up. Now when you go bankrupt there is a cost for doing all the work in your case which is currently about £1715 per bankrupt if memory serves me correct (This is an averaged figure as obviously some cases require more work than others). When you go bankrupt the OR asks only that you pay a deposit towards that initially (thats the £525 figure you pay). In some countries you have to be able to foot the whole bill before the protection of bankruptcy can be sought, but here it is thought that making people pay the whole amount would restrict many from getting the sorely needed relief from creditors so only the deposit has to be paid upfront. Now all that money from the Insolvency Service funds (collected from the IPA's) is used to fill in the gap and pay for the rest of the bill towards the bankruptcy.

Now if the IPA takings do reduce as they were in danger of doing without any change, then they would be left with only 2 options, one being to ask the taxpayer to pay instead (which is not going to happen) or to raise the deposit (which has already happened to a certain extent) further making it harder for people to use bankrupty.

Finally the other point about people not working and costing the state more in benefits.That probably is the case and that decision to falsely claim benefits and deprive other hard working taxpayers of services is one for the individuals concience. I would hope though from a personal opinion that when they start tightening up benefits this becomes less of an option naturally or they work more closely with the DWP to actively identify those bankrupts claiming benefits who are choosing not to work rather than being unable to work

dojoman

truegemini666 wrote: »

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.

Yes I went BR in Nov 2009, and yes I am paying an IPA which only has a few more months to run. If you have a look at my previous posts you will see all the relevant facts about my BR there.