IPA's AND PARTNERS INCOME

debt_doctor

Hi, this is from the insolvency service technical manual, hope it helps !!

31.7.16 Income received from spouse/civil partner/partner

It is reasonable to expect that within the household of the bankrupt and his/her family, the income received by a working spouse/civil partner/partner (all referred to as "partner" for the remainder of this section) or a partner who receives income from other independent means, will be used to contribute to the household expenditure in some way, for example by purchasing food, clothing for him/herself and any children, etc. The bankrupt may genuinely not know his/her partner’s income and/or the partner may not be willing to disclose it to the official receiver as they are not personally subject to the proceedings. Legal advice has been received that it is not a proper use of section 366 [note 11] to have a partner privately examined for the purpose of obtaining details of his/her income to establish whether an IPO may be obtained or the level of that order and there is no reason why this should not extend to cover IPAs.
Where resistance to the disclosure of the partner's income is encountered, in the absence of any information to the contrary, it is appropriate for the official receiver to assume that the working partner pays for 50% of all household expenditure. This amount can then be incorporated into an IPA/IPO calculation to assist the official receiver's decision as to whether the bankrupt has sufficient surplus income against which an IPA/IPO can be obtained. It is likely that an assumption of this nature will provokea response from the bankrupt and/or their partner and if the required information is then forthcoming, the official receiver may re-calculate the income and expenditure of the bankrupt taking in to account the information provided with regard to the actual contribution of the partner, to establish whether the bankrupt has surplus income available for an IPA/IPO. Flexibility will be required in any re-assessment, especially where the partner works part-time.
As with state benefits which supplement earned income, whilst it is acceptable to include the income of the bankrupt's partner as part of the total income received in to the household of the bankrupt, it should be noted that an IPA/IPO claim can only be made against the surplus arising from the bankrupt's income.Any calculation of surplus income for the purpose of obtaining an IPA/IPO should work out the surplus available having assessed total income and total expenditure of the bankrupt and his/her household, then proportion the extent of any total surplus arising against the income contributed by the bankrupt. The Income Payments Calculator available on the Technical Section intranet site may assist in proportioning the bankrupt's share of any surplus when assessing an IPA/IPO.

PixiePie

Cheers for the Debt Doctor, very helpful the last bit particularly about how the IPA/O is only calculated on any excess you personally have (I did think it was a bit harsh to penalise someone else if they want to earn extra for relatives birthday pressies for eg as it's not as clear cut as 'you're someone's partner, you split everything 50:50' nowadays is it?).

fermi

It does show that the OR has at times a tricky judgement call to make regarding disclosure of a partners income.

While an IPA must of course be assessed on the bankrupts surplus alone, the OR also at times needs to be satisfied that the bankrupt is not bearing a disproportionate share or the household expenses relative to individual income in order to avoid an IPA.

Personally, I think it's best to provide the OR with with the fullest information possible, but make clear who/where income comes from and what the exact contributions to the household out of this are. That avoids any problems and awkward questions further down the line.

Just a personal view though.