Reasonable expenses during lockdown 23 April 2020 at 6:18PM in Bankruptcy & living with it 2 replies 221 views

dvethom

I was declared bankrupt at the end of January due to an imminent and large reduction in income beginning in February. In my interview with the official receiver it was decided that because of the inconsistent nature of my income (I’m freelance so monthly totals vary a fair bit) that I’d provide details after 3-6 months as evidence of my expenses and my reduced income to confirm whether or not I’d need to make any payments to creditors. Since then my income has reduced even further of course due to the pandemic but so too have my expenses. I’m just wondering if anyone might be able to throw any light on whether the OR will be likely to make a decision based on my expenses during what would have been normal circumstances or how they are as a result of the pandemic and lockdown? Obviously my expenses for travel etc are greatly reduced because of working from home but would they therefore say the money saved in light of this should now go to my creditors or that under normal circumstances those would be my expenses so would still be considered reasonable even though I can’t actually spend it on travel etc 

I’m sure this is a huge grey area at the moment but interested in any educated guesses! Thank you! 

mwarby

I don’t think the OR will accept that Coronavirus has reduced your income, but that you should be able to claim expenses you would have incurred had there been no Coronavirus, as that wouldn’t be fair.

what it appears to me is that the OR will look at your income and expenditure in 3-6 months. The main concern will be wether you can afford an IPA based on the new norm

in general the bankruptcy should allow you a reasonable standard of living, you shouldn’t be living it up, but also you don’t need to exist on baked beans, freeze or not maintain car. You should for next 3-6 months try and follow that, you don’t want any expenses which might be seen as taking the mickey, but you do want to demonstrate your costs. 

If thing change in future any IPA setup can always be changed(including to nothing), although once setup it lasts for the 3 year term

sammy32683

In regards to reduced expenses they would generally take what your current income/expenses are weather they are reduced or not. Then once your income or expenses change either returning to normal or reducing further then you will update them and they will make a decision. 

Once an IPA is made it isn't set, technically they could alter it every month if you had large increases and decreases, that's unlikely but the point is they will look at your current income/expenses not your normal or future as when things do change you have to tell them and they will decide if you need to pay an IPA for each change in circumstances.