And another - Student Loans(sorry)

PixiePie

Me again -sorry, brain buzzing with questions at the moment.

I know Student loans aren't wiped by BR, and when my pay rises in Sept I'll have to start paying it again so question:

a) Is there a space for these payments on the I&E form for the OR?
or
b) Do you not pay the repayments during your BR period?
or
c) Something else that I have no idea.

I'm old style loans where it isn't taken direct from your wages, and before I left teaching I was getting my student loans repaid under the shortage subject repayment scheme (unfortunately as I left it due to leaving teaching I'm not eligible for this anymore, so will have to find the money).

Many thanks, sorry for being a pain, I'm sure I'll be back in a couple of minutes with another question....

fermi

As far as I can tell the situation is:

It seems that for the old mortgage style loans, you continue or start to make payments in exactly the same way. Bankruptcy does not effect your liability to make these payments.

However, they should be included as a legitimate expense in your I&E.

There is a box for the BR forms for 'other' expenditure and room to explain/itemise these ammounts.

The text in red is applicable to your case I think.

31.7.37 Student Loans

When considering the income and expenditure of a bankrupt who, at the date of bankruptcy is still liable to repay a student loan, the official receiver/trustee will need to establish whether the outstanding student loan is provable in bankruptcy and whether during the period of the IPA/IPO, the loan, or any part of it, will become repayable if it is not a provable debt in the bankruptcy.

Chapter 40, Creditors and liabilities, paragraph 40.24 explains fully the differences between student loans which are provable and those which are not, but in summary, in all bankruptcy cases where the order was made on or after 1 September 2004, all outstanding student loans are not provable debts and thus are not released on a bankrupt's discharge from bankruptcy. Where the order was made on or after 1 July 2004, all student loans made under the Education (Student Loans) Act 1990 (often referred to as mortgage style loans) were also made non-provable in bankruptcy with the consequence that they were also not released on discharge. Where the bankrupt's student loan liability falls in to the category of a non-provable debt and the bankrupt is required to make repayment against that debt during the period of an IPA/IPO, this is an expenditure which needs to be included in any IPA/IPO calculation (however see also deductions for loan repayments under the Teaching and Higher Education Act 1988 below).

Where bankruptcy occurred before these dates, student loans may be treated as provable debts in the bankruptcy and are released on discharge.

In the case of loans made under the Teaching and Higher Education Act 1988 (often referred to as income contingent loans), repayments are likely to be made through the operation of the PAYE scheme. Where an employer is served with an IPA/IPO and the employee is liable to have student loan deductions taken at source from his/her earnings, the employer should continue to make the student loan deductions for the period during which the IPA/IPO applies. As the IPA/ IPO assessment is made on the basis of take home pay, and the student loan repayment under the Teaching and Higher Education Act 1988 will have already been deducted at source, in this instance student loan repayments should not be included as an expenditure in the IPA/IPO calculation.

It should also be noted that where a bankrupt is in receipt of a student loan this is not income which can be claimed under an IPA/IPO.

PixiePie

Excellent, many thanks for that Fermi

NekoZombie

Yes, as someone who is on the old style loan, I had to include these in my income and expenditure. At a monthly payment of £132 it would have been silly not to

missylou_2

As someone returning to teaching have you checked that your income will actually be highh enough for you to make repayments as the current net income for those eligible for deferment is a bit over the 2k pcm mark?

PixiePie

Ohhh...many many thanks Missylou - haven't really looked into it for years (what with it being paid for me before), but assumed as teachers aren't totally skint anymore (well, I think it's an ok wage at any rate, but then I've been trying to live off a couple of hundred a month lol), I would have to pay something. I'm not getting over 2K gross or net a month, so hurrah! No student loans (and boo, no student loans on the SOA :P)

fermi

Checked earlier and it's currently £2034 pcm gross.

missylou_2

You can phone them now and request a deferment pack and apply for dferment straight away if it means one less thing for you to worry about.

As far as am aware this is valid for a full year and can be done simply by providing a letter from your employer detailing your income for the last three calendar months.

PixiePie

Cheers Missy Lou - I'm not bothering doing this again, as the last three times I've done this, they have totally ignored me and we start the merry go round of warning letters for claims (nothing legal court type, just them writing to me) demanding their money. So will just wait until thr BR and start again then. Oh joy, how I totally and utterly loath the Student loans company (I think they are the worst of all my creditors ever, and you can't get them off your back with BR mores the pity.)