IVA/Bankruptcy and Working Tax Credit

sadpootle

Afternoon all

Have just discovered that my partner and I are entitled to Working Tax Credit, WOO-HOO!
Would my IVA company be able to take some of it? What would happen to that benefit, and any other benefits, if I went bankrupt?

itsnever2lateisit?

I'm sorry, I just dont know, but I'll bring it to the top of the in tray for others who might know

Scarlett.1974

I'm pretty much 100% sure that it counts as income like any other money coming in. From what I've read, the only benefits that are NOT taken into account in BR (sorry, I don't know much about IVAs) is child benefit and possibly DLA, but there's been some confusion about that one, so not sure.

Sorry, probably not what you wanted to hear?

Scarlett xx

fermi

When looking to assess any surplus income to be claimed under an Income Payments Agreement (IPA) the Official Receivers 'Technical Manual' has this to say:

31.7.9 State benefits

An IPA should not be sought where the bankrupt's only or main source of income is state benefit payments without any other significant source of income [note 3]. This applies even in the rare circumstances where the official receiver's analysis of the bankrupt's income and expenditure discovers sufficient surplus for an IPA arising as a result of the income received by the bankrupt which either solely or chiefly comprises state benefits. The official receiver should consider that it is always open to the bankrupt who wishes to contribute, to make voluntary payments. If the bankrupt was minded to contribute on a voluntary basis, having been informed that their income appeared to be sufficient to produce a surplus taking in to account their reasonable domestic needs, a voluntary agreement could be incorporated into an IPA, but it would have to be clearly noted that no enforcement action would be taken if the bankrupt failed to make agreed voluntary repayments.

This does not mean that the official receiver must exclude all benefit payments received by the bankrupt when calculating available income for an IPA. The person making the calculation (usually the examiner) should first consider whether there is income paid to the bankrupt not comprising state benefit . If this is the case, an IPA may be a possibility, and any calculation of income should include all available income, including state benefits which are paid to an individual for the general benefit of that individual and their family. The notable exceptions to this rule when dealing with state benefits is child benefit. The High Court has stated as a matter of public policy that child benefit and similar benefits should not be included in the statement of income when applying for an IPO and there is no reason why this point should not be extended to cover IPAs. Whilst it is acknowledged that in the figures for expenditure there may be outgoings for the benefit of the children, at least to the value of the child benefit received, to ensure that there is no risk of them being deprived of it, child benefit should not be included in IPA assessments. The Department of Work and Pensions website provides useful information regarding allowances and benefits currently in force and can be accessed at http://www.dwp.gov.uk/

Where the bankrupt is in receipt of benefits and other sources of income, the total income should be established (see other income sources at paragraph 31.7.7) and the bankrupt's reasonable expenses deducted (see paragraph 31.7.19). An assessment can then be made as to whether the bankrupt is in receipt of income surplus to his/her reasonable domestic needs. If there is a surplus of income, this surplus should be less than or equal to income from the source other than benefits in order for an IPA to be sought. It should be remembered that whilst the bankrupt's total income including state benefits should be included in the calculation of surplus income, it is the income from sources other than the benefit(s) which is providing the payments under the IPA/IPO, the surplus income from which an IPA is sought should not be comprised of state benefit.

Crystal clear.:rolleyes::rolleyes:

Plus remember they are guidelines, and should not be taken as a statement of the law.

taxi73

no idea just answered to bump it up for you

squirrel_pigeon

As far as I'm aware, you would have to check your proposal. Your creditors may have asked for a clause to be added that said any extra income would need to be paid into the IVA. All IVA companies do things differently so you are best to check with your IP.