Why an IPA? Especially when someone has hardly any surplus?

HPsauce63

So the OR decides that you 'need' say £1200 a month to live on, and your income is £1350, so they take £150 a month off you! (for 3 years.) But why do they not take into account that people may need money for things, like if the car breaks down, or if they are off sick for a few months? You shouldn't have to go back to the OR and ask them to reassess because you've not got enough money!

An IPA should not exist. How are you supposed to move on if you have THAT tied around your neck for 3 years?

dojoman

I have just finished my IPA, your SOA should have provision for any emergencies, if you don`t agree with it then don`t sign it. Everyone is in the same boat and it is a lot better than struggling with the debt for ever.

battyboimatt

I agree I pay £150 a month for my IPA yet Ive never had any problems, I have emergency fund and car maintence on my SOA so nothing unexpected pops up, Im in my final year soonfor payments and have manged well for the past two years.

Also I was off sick from work for 3 months when I was admitted to hospital all Moonbeaver wanted was copies of my sick note and pay slip and that was no problem reduced until I was back at work and then just let them know again and they put it back to the £150 no hassle at all

debt_doctor

Since Dec 2010, in my opinion, the IPA regime as per the Technical Manual, has become unlawful, which is why I've ignored it and challenged virtually every IPA proposal that has come my clients way since that time - with a 100% success rate.
As Dojoman says - if you don't agree with an IPA don't sign it. Bankrupts have a right to reasonable living standards in law. The madness is that in DROs (which are supposedly for the poorest in society to obtain debt relief) the 'allowances' are much higher, as they are in protocol compliant IVAs.
The current IPA regime is all about making the Insolvency Service case management fee of £1715, not making a return for creditors.

I believe IPAs should exist for those with a genuine ability to pay, but not against those who don't even make average earnings.

Of course it's all change soon anyway, looks like the IS will no longer have to be self funding, certainly the courts are being taken out of the equation in debtors petitions and I have a feeling that more of the legwork of 'simple domestic bankruptcies' will be done by the advice sector like DROs, and probably make way for the CFS to be used for calculating affordability of IPAs - cheaper for the IS and fairer and lawful for the bankrupt.

I look forward to it.

DD

alastairq

You shouldn't have to go back to the OR and ask them to reassess because you've not got enough money!

DD's remarks aside.....the very thing the OP complains about, is what makes an IPA so much better than a fixed debt repayment.

The fact is that, in an IPA, the amount paid can be varied according to the BR's circumstances at the time.....which makes the system so flexible.....with the system itself tailored to suit the BR?

How many mortgages are there where a debtor can go to the creditor, show they haven't much money that month, and the creditor happily says ''that's OK, stop paying, or pay less for a bit.....until things pick up.......and don't worry, you don't have to make up the shortfall.''

The issue isn't as much about the IPA system in particular, as about the methods by which a surplus of income is arrived at.

If a BR finds they haven't sufficient to build a small safety net, then they have underdone their SOA.


I would have thought that the very fact that one can go back to the OR to vary/zero the amount agreed in an IPA, as the situation changes, is in fact a good thing?

Lou67

HPsauce63 wrote: »

So the OR decides that you 'need' say £1200 a month to live on, and your income is £1350, so they take £150 a month off you! (for 3 years.) But why do they not take into account that people may need money for things, like if the car breaks down, or if they are off sick for a few months? You shouldn't have to go back to the OR and ask them to reassess because you've not got enough money!

An IPA should not exist. How are you supposed to move on if you have THAT tied around your neck for 3 years?

:T:T:T Agree ... Although if they MUST put an IPA in place, WHY not just make it for the duration of the bankruptcy??? ie; 12 months. NOT 3 years.

lilybankrupt

In my view, the biggest problem with IPA's is the relatively new rule that takes ALL surplus income, rather than a portion of it.

When I was starting to look at bankruptcy I was working under the assumption that the 50% (or a bit more for higher earners) rule was in place, ie the OR would work out your 'essential' outgoings then take 50% of any surplus remaining.

I do understand why an IPA is there, especially for higher earners - from a creditor perspective it would be pretty tough to see someone write off their debts then continue to take home a good wage.

The problem with the 'all surplus income taken' rule - aside from the fact that emergencies will always crop up that have to be paid for on top of essentials - is that it provides absolutely no incentive for someone to make a fresh start / improve their situation / get off benefits.

In my head, I was thinking that if I did extra work and earned say £200 per month extra, I would get to keep £100 a month of that - not lots but enough for a few extras and to save for emergencies. And the creditors would also benefit by £100 per month.

As it is now, after much number crunching the financial difference for me (single, no kids, renting) between working full time on minimum wage, trying for a better job, or claiming out of work benefits (housing, JSA etc) is minimal.

I'm not planning to take the benefits route by the way - I think it's right that I try to pay my way given my debts will be written off - but with the best will in the world it will be very difficult to be motivated to work harder / earn more / make a new start given that not only will any spare cash be taken for the year, it will be taken for three!

So the 'all income taken' rule has, in theory, a negative impact on creditors and 'the state' as well as me. Completely nuts.

Sorry long post, the 'all income' thing was a real shock for me - I saw the 50% thing as the chance to work hard for a little extra and make a fresh start, a light at the end of the tunnel if you like.

debt_doctor

lilybankrupt wrote: »

In my head, I was thinking that if I did extra work and earned say £200 per month extra, I would get to keep £100 a month of that - not lots but enough for a few extras and to save for emergencies. And the creditors would also benefit by £100 per month.

So the 'all income taken' rule has, in theory, a negative impact on creditors and 'the state' as well as me. Completely nuts.

I completely agree, and it is the difference between basic needs (adding up your costs) and reasonable domestic needs (allowing a surplus) - it is lawful and acceptable for a bankrupt to have some spare cash to do whatever they want with.

DD

Grumpy_Shunter

I start my IPA at the end of April. I have done my expenditure list but since learned that the few items that I could of jiggled around to give me a few quid a month to treat my wife is not allowed!, i.e presents, birthdays etc,

I feel morally obliged to pay back what I can over 3 years via an IPA but with no spare income it's just like before I went BR, i.e owing thousands, miserable, no spare funds, staying in etc. What's the point?

debt_doctor

Grumpy_Shunter wrote: »

I feel morally obliged to pay back what I can over 3 years via an IPA but with no spare income it's just like before I went BR, i.e owing thousands, miserable, no spare funds, staying in etc. What's the point?

- that is exactly how clients feel about BR in the last 2 years - under the old rules I found that folk were generally happy to pay 50 % is of their spare income, the other 50% gave them a feeling of at least some financial freedom.

The proof of the pudding has been in the eating - I (and my colleagues) now process roughly about one quarter of the BRs we did 2 years ago.
Think again Insolvency Service.

DD

Grumpy_Shunter

debt_doctor wrote: »

- that is exactly how clients feel about BR in the last 2 years - under the old rules I found that folk were generally happy to pay 50 % is of their spare income, the other 50% gave them a feeling of at least some financial freedom.

The proof of the pudding has been in the eating - I (and my colleagues) now process roughly about one quarter of the BRs we did 2 years ago.
Think again Insolvency Service.

DD

A deliberate ploy by the IS perhaps? If BR's are going down in numbers, then it seems to be working, unfortunately.

Would I be better off going on the dole before I start my IPA? After my AD, Jan 4th 2013, I would be free, wouldn't I?