IPA once discharged

100things

Hi

I am confused...once discharged, does the OR still need to know about any change in income (up or down)? Would someone with a variable income need to be sending a new SOA every month?

I just read a post that said there is no reason to be in contact with the OR once discharged, does discharge mean you can do what you want, or does an IPA override that?

Is my bank account being closely monitored? Will the OR be banging down my door demanding more money if my balance goes over a certain amount?

Sorry if I sound like a paranoid Paula here, just want to make sure I am doing the right thing!

Thanks in advance

alastairq

All depends on whether one is under an IPA or not.

If not [ie, no surplus income identified] then, once Automatic Discharge s achieved, one need not have any further contact with the OR, unless an issue arises from other sources. In the above, no, one no longer has to inform the OR of a change in financial circumstances within 21 days...Discharge means, no longer Bankrupt.

However...............if there is an IPA in place..[ie, a surplus of income was identified from the SOA]...then, since this will run for three years from date of agreement, and can be varied up, down, or revert to zero altogether, should one's circumstances alter..then, yes, the OR will need to be informed of a change in financial circumstances. [it is not a credit repayment...simply, the OR is realising surplus income...if suddenly, there is no surplus, then the amount paid in the IPA must be varied to suit.]

Whilst the OR does have the ability to monitor bank accounts, in general they do not do so.

What one does with one's SOA is entirely up to the individual.

If one has a variable income, then generally, the OR will calculate an average over a whole year, to establish whether an overall surplus exists.

Remember, an IPA is an agreement.

If one disagrees with the figures an OR has arrived at, one can argue one's corner, and refuse to agree.

100things

Thanks, that is very useful information.

I do currently have an IPA, but I am contemplating returning to full-time work, as my current part-time role is likely to end soon.

I guess I find it interesting (if that's the right word) that the onus is on the individual to declare and that it is not subject to periodic review by the OR. Obviously a negative change in circumstance would encourage one to contact the OR to negotiate a reduction in the IPA, but a positive change? I would be willing to bet that there are many who have simply kept quiet and therefore evaded an increased IPA?

However, I suspect that my outgoings, due to a necessary re-location and working full-time would increase so that most, if not all, additional surplus would be taken up anyway but I am going crazy not working!!

Thanks again

tigerfeet2006

You sign a legal undertaking that you inform the OR with in 21 days of any changes. This is legally binding and could result in prison if you do not do so.

Another bit of paper you sign is so that Her Maj's Tax Bods and the OR can exchange information. So Tax Bods will tell the OR about any changes in tax which generally means a change in income.

So there is no getting out of it.

elljay

My understanding has been that after discharge and if you have an IPA, then you need to notify a change in income, but if you receive a one-off payment you do not. So for example, if you win the lottery, you do not need to notify, but if you invest the dosh and receive an income from it, then you do need to notify the OR and your IPA will be adjusted accordingly. Hopefully someone will say if that's wrong.

So if you're taking on extra work or a new job, then you will need to notify and unless you can justify it, any extra income from it will be taken as part of your IPA. Assuming you're on PAYE (and not cash in hand - as if !!) then your tax records can be checked as you signed your agreement to this at the beginning, as has previously been said.

Incidentally while I believe that it is unusual for ORs to look at your bank statement, I have been asked just this week for copies of mine, going back 3 months, to confirm income/expenditure - probably as it is very variable from several different sources. So not unknown.

alastairq

I have been asked just this week for copies of mine, going back 3 months, to confirm income/expenditure - probably as it is very variable from several different sources. So not unknown.

Hi..the OR will ask first, but has the ability to obtain the information directly from the bank.