IPAs and new benefit limits

lilybankrupt

Not a question as such, but i've just been reading about the new 'total benefit' cap, part of the government welfare reforms.

As a single person, my 'cap' is £350 per week, which is about £1,500 per month. Presumably this level is supposed to be low enough to encourage people off benefits and in to work.

I'm not intending to start a debate about whether this level is too high or too low or whatever - I guess people will have different views - but what does occur to me is that this is quite a bit higher than what i'd be allowed in an IPA.

I've calculated that my total monthly budget, assuming rent at the LHA allowance amount of £500 per month, would be £1,250 at 'best'.

So, aside from the question of whether 'reasonable living costs' in bankruptcy should be set below what the government views as 'minimum living costs', the other point is that if I were to earn £1,500 a month (same as benefit amount maximum) I would be in an IPA of say £250 per month for 3 years. Whereas on the same amount of benefit I wouldn't get an IPA as it's all benefit income, and i'd have £250 per month available on top of 'reasonable living costs'.

This just doesn't feel quite right somehow!

debt_doctor

That is because the IS are putting a very low value on what is reasonable. An unlawful value in my opinion.

DD

lilybankrupt

DD...I SOOOOOO wish you were at my local CAB and could help me through my upcoming BR...

debt_doctor

lilybankrupt wrote: »

DD...I SOOOOOO wish you were at my local CAB and could help me through my upcoming BR...

How do you know i'm not...........;)

DD

sniggings

You're working on the premise that £350 a week would not ever be allowed on an IPA, which is where you are confusing yourself.
You can claim what is a reasonable living expense, an example, if you live in belgravia in London and your rent was £1000 a week, you could quite happily claim that and it would be allowed.

The difference now being, someone on benefits, can not live in a £1000 flat, even if it is a reasonable rent for the area.

lilybankrupt

debt_doctor wrote: »

How do you know i'm not...........;)

DD

Hehe - I think it's because when I went to my local CAB for help, they set me up with a free appointment with an insolvency practitioner - which was very good of them but I think they did it because my case was too complicated - especially as I haven't heard anything from them since! Which now I think about it is a bit annoying as I also need advice re: housing...

lilybankrupt

sniggings wrote: »

You're working on the premise that £350 a week would not ever be allowed on an IPA, which is where you are confusing yourself.
You can claim what is a reasonable living expense, an example, if you live in belgravia in London and your rent was £1000 a week, you could quite happily claim what and it would be allowed.

The difference now being, someone on benefits, can not live in a £1000 flat, even if it is a reasonable rent for the area.

Yes that's a fair point.

I think in other countries, they use annual salary rather than individual expenses eg you can earn £10,000 before getting an IPA, regardless of how this is spent or whether you need that much. I guess for people with below average rent for example that would work in their favour, but if you earn more but genuinely need that to live 'reasonably' it would be a bit unfair.

I'd still maintain though that the way IPA's work at present is counter-productive, in that you're going to be a lot better off not working during the first year. I'm not saying this is the 'right' thing to do by the way, just making an observation.

I can only speak personally, but I know that if I were allowed to keep even 20% of any extra earnings above 'reasonable expenses', I'd be much more motivated to try to earn more, which of course would benefit the creditors too.

sniggings

lilybankrupt wrote: »

Yes that's a fair point.

I think in other countries, they use annual salary rather than individual expenses eg you can earn £10,000 before getting an IPA, regardless of how this is spent or whether you need that much. I guess for people with below average rent for example that would work in their favour, but if you earn more but genuinely need that to live 'reasonably' it would be a bit unfair.

I'd still maintain though that the way IPA's work at present is counter-productive, in that you're going to be a lot better off not working during the first year. I'm not saying this is the 'right' thing to do by the way, just making an observation.

I can only speak personally, but I know that if I were allowed to keep even 20% of any extra earnings above 'reasonable expenses', I'd be much more motivated to try to earn more, which of course would benefit the creditors too.

I agree, it's harsh, and as you say it makes little sense when on an IPA to want to work extra hours etc but this new system, which has just came in over the last couple of years is aimed at increasing the money that goes back to the creditors, I made the argument that this system would not do that but debtinfo provided figures to say I was wrong and the take has increased (there is a thread on this, sorry to lazy to find it), I guess they are looking at this on a purely, what brings in the most money, rather that what is fair.

lilybankrupt

sniggings wrote: »

I agree, it's harsh, and as you say it makes little sense when on an IPA to want to work extra hours etc but this new system, which has just came in over the last couple of years is aimed at increasing the money that goes back to the creditors, I made the argument that this system would not do that but debtinfo provided figures to say I was wrong and the take has increased (there is a thread on this, sorry to lazy to find it), I guess they are looking at this on a purely, what brings in the most money, rather that what is fair.

That's interesting info, thanks.

Maybe there are some people who earn above the IPA limit and continue with their jobs and salary as they were so pay more, some people who are on very low incomes / benefits and so wouldn't have paid anyway, with only a few in the middle ground where they have the option to keep their income low-ish eg by not doing extra hours. Giving a net increase in creditor payments in total.

tiggerbodhi

Can't comment on the rights and wrongs of the systems and calculations in place, but for me being on an IPA did oddly make my life on the whole better as it "allowed" me to take a lower paid job from what I was doing but still have same the same effective take home pay (the first month my NET pay IPA is reduced the IPA was to reflect this)
This has allowed me to progress my career in the right direction

alastairq

I am bemused by the fact that..although my pay has 'stood still' for a few years......I take home slightly less than the maximum deemed for benefits payments..per individual!

Perhaps this figure [£350 per week?] should be deemed as everybody's 'right'.....and when working, tax should only be levied on amounts over this?

Maybe that's why I didn't get an IPA? [even though under the 'old' rules, I still wouldn't qualify even today!!]

BTW, to get further feedback from CAB, individuals must ensure they are placed on the local CAB Christmas card list.