Bank statements after bankruptcy

Navigator1

Just wondering if anyone has any experience or advice...
My partner declared himself bankrupt 6 months ago. 6 months down the line he has had a letter from the OR asking for 6 months bank statements and proof of income and saying they intend to collect surplus monies. Does this mean that he will be required to pay a lump sum for the last 6 months or does this mean they will set up a payment schedule as from now? If he has to pay a lump sum, what happens if he hasn't got any cash to pay it? If a monthly amount is set up, is this normally set up for a year or is it 3 years? What if you end up being unemployed? What happens then?
I would appreciate a response if anyone has experienced similar. Thankyou.

alastairq

The OR will need to agree a SOA. It is normal to view bank statements at some point, if the bank itself will not help.....also normal to request wage slips.

From what you say initially, my impression is, your OH has a surplus on his SOA.......and the OR has just got around to sorting out what may be an IPA .

Also, it may be nothing more sinister than a Nil Tax IPA. If this is the case, then it would have been expected that your OH has put to one side sums which would normally have been paid in tax, pending eventual collection.


Briefly, a Nil Tax IPA lasts until the end of the tax year... and occurs when someone on PAYE petitions BR....at some point, HMRC issue a N[il] T[ax] code.......which would give the BR a surplus of income.

This surplus is collected for the BR estate.


The other type of IPA/IPO is an agreement for the collection of any surplus income, over-and-above that allowed for the SOA.

this type of IPA lasts for three years from the date of agreement...and note, it is an agreement.

This IPA can be varied up, down, or zeroed altogether dependant on changes of circumstance.

Therefore, if circumstances do change, the OR must be notified, and the agreement adjusted accordingly.

[thus, if unemployment strikes, the IPA goes to zero.....and the time at zero counts towards the three years.]


If no IPA is in place at time of Automatic Discharge, then the OR cannot seek one retrospectively. [in normal circumstances]

fermi

Also, technically, the OR can claim any build up of surplus funds that might accrue in your account while undischarged.

That is quite rare, but does happen.

Has the OR had any cause to think that this might be the case with you?

Navigator1

The initial problem is that it's 6 months since the bankruptcy. If the official receiver says that a certain amount of tax is owed for the last 6 months, what happens if my partner doesn't have the money to pay for this in a lump sum?
Or is it that the official receiver will come up with an IPA from now and is using the 6 months of bank statements to decide on the amount to be agreed??

alastairq

Or is it that the official receiver will come up with an IPA from now and is using the 6 months of bank statements to decide on the amount to be agreed??

that is more likely....

The OR doesn't know how much tax should have been paid....without wage slips.

OK...question...has your partner been placed on a Nil Tax [NT] code?

If so, your partner has been receiving gross pay [less NI, etc]....ie, what is paid before tax.

If this is the case, ideally your partner should have put aside the amounts normally taken in tax....from the date the NT code was applied.

Navigator1

I've just emailed him to ask him about the nil tax code....
Think one of the problems might be that in the past he was self employed and then worked for an organisation, still being self employed if that makes sense....
Just say he was put into nil tax code (I won't know this until he emails m back) if he hasn't put money aside to cover this over the last 6 months what happens?

Navigator1

He says he hasn't had notification of nil tax code and he receives a wage from this firm although he is still self employed.

arcon5

If he is self employed then they don't deduct tax and NI from him, he is responsible for dealing with this himselve so won't have a tax code for whomever pays him for his services

Navigator1

So we're still stuck wondering about the initial question. Will the OR request some form of lump sum for the last 6 months since the bankruptcy order....or will an IPA be formulated using bank statements and income information??

alastairq

Since you say OH is self-employed, this looks like a surplus-based IPA issue.

See my original post......once an IPA has been agreed [between OH and OR]...then that is when payments commence.

Nothing is back-dated.

The IPA will be in place for 3 years from date-of-agreement.

the IPA can be varied up, down, or zeroed altogether...dependant on OH's circumstances.

If zeroed, then that time also counts towards the 3 years.


Once the OR has worked out OH's average income, and compared to the agreed SOA, then..if a surplus is identified, and IPA will be sought.

The amount of surplus is subject to negotiation, as above.

The Surplus-based IPA does not run from the date of petition of BR.

So, no need to worry.....?

Navigator1

Thank you so much. You have been extremely helpful and reassuring.