IPA Payments help.

Oliver2809006

Hi All,

I was made bankrupt in July 2016.

After the Official Receiver reviewed my income & outgoings they decided I had a £203.00 surplus per month and set up the IPA over 3 years starting February 2017.

With being self employed they used previous tax returns to assess my income which in hindsight was predicting higher earnings than I have ever made but I agreed.

The timings of my bankruptcy meant I didn't have to make a tax return for 16/17 so never knew how much I made for that year.

Anyhow I made 27 payments (£5481) before I submitted my first tax return which was for 17/18 tax year.

Unfortunately the return was £6000 per year / £500 a month less than the OR predicted and set out for my IPA payments therefore I never had any surplus to pay the £203 a month rather I was / am still losing money.

I only realised this when my tax was due and having to pay 6 months in advance too and looking into why and not having the money - this has lead me to be £6000 in arrears to the Inland Revenue.

With being self employed it's hard to know / prove what you've made until your tax return and wasn't aware how much my takings had dropped.

My question is can I reclaim the monies paid (5481) as it's clear the surplus was never there in the first place with my 18/19 return looking a similar figure?

I've contacted Citizens Advice and they've never come across this situation and have asked the OR to review and contact my creditors.

An IPA is set up if you've surplus monies and clearly I haven't which seems an unfair system compared to if I was employed.

I'm staring down the possibility of being made bankrupt again through mainly the IPA payments.

Would appreciate any advice or experience anyone has had with this.

debt_doctor

Hi,

Interesting!

My view is that as you agreed to the IPA and the implication that you had spare income, it would be difficult to overturn that decision - even though you now have the hindsight proof of your actual position.

Certainly not anything I have ever come across, would be interested if anyone has experience of this.

I suggest that you put your point to the OR (Nothing to lose) - you should certainly use it for your IPA to be varied to zero for the remaining term.

DD

Oliver2809006

Thank you for your reply Debt Doctor.

Yes the OR has set my remaining figures to zero, basically the last 9 payments with a review in 6 months.

The company taking the payments Clarke Willmott solicitors have been selective in what they relayed to the OR so I've learnt to go directly to them instead so I make my case clear.

Seems an unfair system for self employed added that the first year of bankruptcy you don't declare a return so quite a while before you can prove a reduction in earnings, in my case 27 payments too late.

Would be ironic to go bankrupt again due to these IPA payments and hoping the OR is understanding especially as I've fallen in debt to the Inland Revenue.

The OR has contacted my creditors and I'm awaiting the response.

I'm surprised that I can't find similar cases, surely I can't be the first one?

debt_doctor

What has the OR contacted your creditors for?

DD

Oliver2809006

I presume to tell them my predicament, I would think even if they object to the monies being refunded wouldn't change the OR decision.

Bizarrely Lowell phoned and text me the past couple of days (one of the creditors) which seems a coincidence.

I've just looked into it further and hard to find anything under the Insolvency act of this situation but there are steps to appeal if I am unsuccessful.

One thing that stands out that I've had no contact from the trustee (Clarke Willmott) on my income since the start of the IPA which I think should happen regularly with being self employed.

Appreciate your help.

SarahDoe

Hi, I do not know much about your case unfortunately. But I have found CW pretty useless. I have been going to OR directly and it worked out a lot better.

debt_doctor

I find it unlikely that any of those funds have reached those creditors. The OR always points out about 'getting a return for creditors' when in reality it is often about getting a return for various government departments.

When there are any assets (your IPA payments) then there is an order of who gets paid. High on the list are the OR's Case Management fee, then the Secretary of State fees, Clarke Willmot fees etc.

The monies you have already paid still lies entirely or significantly in the hands of the above.

DD

Oliver2809006

Yes I am not surprised that the monies get swallowed up even before the creditors get there share.

I came out of an IVA with McCambridge Duffy and was shocked how much of the money I was paying back found its way to the creditors - from £22,000 in payments the creditors got around £5000!

Anyhow I've made it clear to the OR I need the refund to pay my tax arrears and proved so with statements so hopefully that helps a little.

In response to Clarke Willmott I suppose they are acting on their behalf and partly the creditors - but won't deal with them unless needed too.

I understand no monies from the £5481 has been paid to anyone and only gets paid at the end of the IPA.

debt_doctor

Don't get me started on IVA's !!

I'll be back tomorrow to see if there is anything I can add - I would be very interested in the outcome of your actions.

DD

Oliver2809006

Yes I'll keep you posted.

It's a lot of money and a system that doesn't work for self employed people.

It seem odd that even though you don't need to pay tax the first year of bankruptcy you don't have to submit a return.

This would give earlier help for IPA payments and the IR of recent trading.

Once again thanks for your help DD

Oliver2809006

Well I appealed against the payments I've made over the past two years to the OR and they have decided no refund is due!

To say I'm disappointed is an understatement and feel this is an unfair system for self employed people.

Can anyone advise where to go from here please?