Bankruptcy IPA when there is an income deficit

MoominTroll

I submitted my bankruptcy application with an income and expenditure deficit of over £600 per month. I was put on an NT tax code and had to sign an IPA agreement to pay the amount saved in tax (around £100 per month). After reading online it would appear that IPA agreements are only put in place if you have a disposable income of £20 or more per month, which I clearly did not have. Should I have been made to enter an IPA agreement? I have been told to also pay any bonuses received on top of my salary. Any bonus I receive goes towards topping up the deficit in my income.

iquit

If memory serves me correctly, the tax code change and IPA are different. Tax is collected for a year and IPA for three years. Someone with more knowledge should be along to help you soon.

TheGardener

Any BR who is working and earning enough to pay tax will have an NT IPA.
A 'surplus' IPA is only arranged for someone who has sufficient surplus in their income after reasonable expenditure. They are 2 separate arrangements.

If you believe your income is so low that the bonus is a crucial part of your essential living expenses, then you need to go back to the OR and discuss it.

What is the main cause of the big deficit?

MoominTroll

The main reason was not earning enough to live on, (single parent, no parental maintenance, the usual story) so used credit cards to supplement my income and ran up debt to the point where I couldn't afford the repayments. The bonus I now earn has replaced credit cards in supplementing my income, so I was starting to get back on my feet financially. Now I can no longer keep it, it will put me back to square one and in the same position I that meant I had to go bankrupt in the first place.

WhenIam64

no parental maintenance

Just an aside to your main question. Is there a particular reason for this? Have you made any application?

You're going bankrupt but do not seem to want to chase up an existing liability to you(r children)

Edit: That last sentence is not meant to be judgmental even if it comes across that way. It was more a question of have you looked at what you might be owed as well as owing?

MoominTroll

Because my ex receives IIB from an old accident the CSM rules that he only has to pay £7.50 a week (or similar, I can’t remember), which I could have contested. He is also self employed and declared earnings much much less than actually earned. He had the money to take advice from a lawyer who said his contribution was voluntary (therefore he volunteered nothing) I eventually gave up trying for the sake of my sanity. It’s been easier to struggle financially than have to deal with him. My youngest has turned 18 since my application. I don’t know if I could try to claim backdated maintenance.

JCS1

The NT IPA will only last until the end of the current tax year, so 5th April. Assuming you get paid monthly, it will end with March.


Apologies if you have already done it, but it might be worth posting your statement of affairs on the debt free wannabe pages - the people on there will make lots of suggestions as to where you may be able to make savings in your budget.

WhenIam64

My youngest has turned 18 since my application. I don’t know if I could try to claim backdated maintenance.

@MT. When you said "the usual story", it is unfortunately true. You'll bear the burden of any bankruptcy as there does not appear to be a counter to others walking away from their responsibilities. Those responsibilities are for children up to 16 or 20 if they are at Uni (tertiary education)

As has been said at #3, you'll need to look at the calculations as yours may be different from the OR.

You might want to pop along and see a benefits specialist to ensure you are claiming your entitlements. May not help in the short term as the surplus may be paid elsewhere, but when the restrictions are lifted, there may be a future benefit to the household.

Minkym00

So you have an NT IPA but no Surplus IPA? That sounds correct to me. An NT IPA just means that the OR collects your income tax that would have otherwise gone to HMRC, so you are no worse off.

If you need to use the bonuses to ensure you don’t get into debt then the OR should not be claiming them. Otherwise they are leaving you in a deficit position as you have no surplus. Complain to your examiner and, it you don’t get anywhere, complain to the actual OR, you can find their name online. (Even though people on here say “talk to your OR” it is unlikely to be the OR you actually deal with, but an examiner working in their name).

Unless you’re paying £1000 p/m then money from an IPA goes towards the OR’s fees NOT your creditors so they cannot leave you in a deficit position - threaten to go public if needs be.

TheGardener

Can you do us an SoA - there's a good one here you can put post on this forum - there is a button at the bottom that does it for you. (but at 20:50 this evening the link is not working - it should be back soon)

If you don't have sufficient income without the bonuses, you need to challenge the OR based on a reasonable SoA.

debt_doctor

Hi,

Yes, please post your SOA.

Also worth remembering that if you do have a budget that does not support your reasonable domestic needs then you can ask for the NT tax code monies to be retained by you.

DD