what if you have quite a bit of surplus income

littlestar24

Hi Would like to know in practise, what happens if you have a lot of surplus income to go towards an IPA, do you have to pay all of that surplus or do they leave you a little bit? Thanks

Stevie_Palimo

If it is for an IVA then by rights your income will have been evaluated prior to it starting unless your income fluctuates each week/month in which case I would ask advice from a professional.

I'd be pretty sure this will be covered under the agreement whereby you have to state any additional income that have and gain.

National_Debtline

Hi

You would have to pay all of it, so make sure you complete the financial statement to cover all of your essential living costs in a realistic and sustainable way.

There is some useful information on IPAs here:
www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/asked-to-make-an-income-payments-agreement/

James
@natdebtline

NotEvanAPot

Any and all surplus will be recovered under an IPA in bankruptcy.

A certain amount, in ratio to debt total, would put a question on bankruptcy being the feasible option. It is there as a legal protection for those who have no other alternative. Should a large enough surplus exist on the application income and expenditure form, it can be rejected.

Speak with one of the debt charities about this if you are pre-application, otherwise the discussion with the OR will centre around recovering anything that is not covering basic living expenses. James @natdebtline is absolutely correct in saying you will need to ensure they are recorded correctly, but do not be tempted to inflate areas as the OR have fair strict limits depending on circumstances of household.

dojoman

NotEvanAPot wrote: »

Any and all surplus will be recovered under an IPA in bankruptcy.

A certain amount, in ratio to debt total, would put a question on bankruptcy being the feasible option. It is there as a legal protection for those who have no other alternative. Should a large enough surplus exist on the application income and expenditure form, it can be rejected.

Speak with one of the debt charities about this if you are pre-application, otherwise the discussion with the OR will centre around recovering anything that is not covering basic living expenses. James @natdebtline is absolutely correct in saying you will need to ensure they are recorded correctly, but do not be tempted to inflate areas as the OR have fair strict limits depending on circumstances of household.

Sorry but not sure what you mean by this?

NotEvanAPot

Let's say debts of £30,000 on a bankruptcy petition, and I&E shows £500 surplus. If the interest on the debts can be frozen, this would make repayment possible over 5 years. In this situation, bankruptcy would not be the best option and an application can be rejected because of it.

The creditors would be significantly disadvantaged if an application was accepted, because the maximum recoverable would be fixed to 3 years under an IPA (£18,000 to divide between).

MEM62

If you have that much of a surplus are you sure that bankruptcy is the correct course of action for you? Have you taken debt advice?

luvchocolate

I believe the above post is giving an example and not what the op has asked.
Of course in that example case B.R would not be advisable.

NotEvanAPot

luvchocolate wrote: »

I believe the above post is giving an example and not what the op has asked.
Of course in that example case B.R would not be advisable.

The first sentence of my first post is pretty clear though:

Any and all surplus will be recovered under an IPA in bankruptcy.

worriedmamma

It's worth posting an SOA with your debts amounts etc so that people can see the full picture for an accurate answer I guess.

dojoman

NotEvanAPot wrote: »

Let's say debts of £30,000 on a bankruptcy petition, and I&E shows £500 surplus. If the interest on the debts can be frozen, this would make repayment possible over 5 years. In this situation, bankruptcy would not be the best option and an application can be rejected because of it.

The creditors would be significantly disadvantaged if an application was accepted, because the maximum recoverable would be fixed to 3 years under an IPA (£18,000 to divide between).

Forget about the interest, the surplus could be because they will not be paying anything back to the creditor, the amount of surplus left if still servicing the debt would be a lot less than the amount quoted. This happened to me and I was left with a substantial amount left as surplus, whilst servicing the debt I was in a negative situation. I ended up with an IPA but this was before all the surplus was taken.