Issues and questions that come up during your bankruptcy period

Moderators: TalbotWoods, JaneClack

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By TalbotWoods
#237823 Income Payments Agreements in Bankruptcy

A change in the way Income Payment Agreements/Orders are calculated has been issued to Official Receivers.

When does it come into effect?

It comes into effect from 1st December 2010

Does it affect IPA/O that is already in place?

It does NOT affect any IPA/O already in place by 1st December

It does NOT affect any change required to any existing IPA/O

What is the change?

With effect 1st December only the first £20 of surplus will be discounted and after that 100% of any surplus will be taken towards the IPA/O.

Currently the first £100 of any surplus is exempted and then there is a sliding 50% - 70% sliding scale, this will cease.

What does this mean?

Currently if there is a £400 surplus after all expenditure is taken into account, then an IPA/O would be put into place for about £260 per month.

Under the new system, if there is a surplus of £400 then an IPA/O could be put into place for £380 per month.


An IPA/O only last for 3 years only, and is normally more generous in its expenditure allowances than IVA or DMP.

Once more information is know we will let you know
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By TalbotWoods
#237935 A bit more information for you all.

The document makes it very clear that this new ruling will ONLY affect the potential IPAs of those going BR AFTER Dec 1st 2010.

Those who are currently under IPA agreements will continue to be assessed under existing rules.

Those who are currently bankrupt and do not have an IPA will NOT be re assessed using the new rules.
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By TalbotWoods
#238445 The Insolvency Service has re-published its guidance on IPA/O and has amended the key section to read:

How are the IPA and IPO payments calculated?

The official receiver or trustee will not try to get an IPA, and the court will not make an IPO, if this would leave you without enough money to cover the reasonable domestic needs (the day-to-day living expenses) of you and your family. Your family includes everyone living with you who depends on you. This means children, and any adults who don't have an income. Your trustee in bankruptcy or the court will assess your 'reasonable domestic needs' by examining all the circumstances of your case. There is no fixed amount for an IPA or IPO and each case will depend on individual circumstances.

You will have to give details of your income and spending in:

* your Statement of Affairs, if you have applied for your own bankruptcy, or
* the preliminary information questionnaire (PIQB), if someone else has made you bankrupt.

The Statement of Affairs and the PIQB ask for details of your income and normal monthly expenses, such as rent, food, heating and lighting, and clothing. You will be asked to provide proof of your income and spending, such as payslips, utility bills, rent books etc.

The official receiver or your trustee in bankruptcy will assess your monthly spending to decide whether, in your circumstances, the payments are reasonable. They will deduct your reasonable domestic expenses from your income to find your 'real disposable income'. This is the money that is left over every month after you have paid all your necessary expenses.

Normally, you will be expected to pay all of your disposable income every month as your IPA or IPO payment. So the more disposable income you have, the more you will have to pay.

If your main or only income is state benefits, the official receiver or the trustee in bankruptcy will not normally try to get an IPA or IPO.

The publication can be downloaded as word document or viewed as a web document here: ... Guides.htm

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By TalbotWoods
#239073 Ho Hum
Thanks to fermi

Technical News item: Bankruptcy: Revision to the way in which Income Payment Agreements (IPAs) and Income Payment Orders (IPOs) are sought.

Type: Case Administration
Issuer: ORBS
To: All A2s and above

Following consideration by the Directing Board, the way in which the amount sought under an IPA or lPO has been amended. These changes should be put into effect from 1st December 2010 for all cases where a new IPA/IPO is sought. Existing IPA/lPOs will continue under the present arrangements as will any subsequent variances throughout the lifetime of all existing agreements/orders.

The changes are:

* The minimum amount that the official receiver should seek to claim under an lPA or IPO has been reduced to £20,
* The bankrupt will also no longer retain any of the remaining surplus once all their reasonable household expenditure has been accounted for.

These changes should be applied to all new IPA/lPOs agreed on or after 1st December 2010. Guidance is given below with regard to their application in respect of existing IPAs at that date.

Identifying surplus income.

When assessing the expenditure claimed as essential by the bankrupt, the official receiver should always consider each case on its own merits. A decision should be made as to whether the expenditure is realistic, relevant and appropriate to the bankrupt's circumstances and whether the amounts included are sufficient to provide for the reasonable domestic needs of the bankrupt and his/her family. The Household Expenditure Spreadsheet (HES) which provides average expenditure statistics available for various household groups, based on the most recent Office of National Statistics figures is available on the Intranet. Chapter 31 of the technical manual has also been updated to reflect the changes in approach. An updated lPA calculator will be on the intranet from 1st December.

Removal of the retention of any surplus.

As the bankrupt will no longer retain any surplus, an accurate but reasonable assessment of income and expenditure is all the more important. It is recognised that at lower levels the assessment can be at the margins. For that reason a provision of £10 per month, per dependant household member should be allowed to cover sundries and emergencies in all cases. For a married couple with 2 children, this would equate to £40 per month. There are no other changes to existing guidance in the Technical Manual as to how reasonable domestic needs should be assessed.

Maintaining a consistent approach.

Although the individual circumstances of every case will be different, the official receiver must try to maintain a consistent approach when considering the expenditure claimed by the bankrupt. During the interview a meaningful dialogue between the bankrupt and examiner must be entered into to ensure that the provisions are applied consistently and equitably.

If a bankrupt's expenditure appears to equate exactly with his/her evidenced income, leaving no surplus the expenditure should be carefully examined and tested against guidelines provided in the HES and chapter 31 of the technical manual. Particular care should also be taken where the debtor appears to have had assistance from a commercial organisation in the completion of their statement of affairs as a set of pro-forma outgoings may have been included which are not necessarily expenses actually incurred by the bankrupt on a day-to-day basis.

Where the bankrupt states that the continued payment of certain expenditure above that considered reasonable by the official receiver is required to meet the reasonable domestic needs of the bankrupt and his/her family, further information detailing the extenuating circumstances justifying why they consider this an essential expenditure should be sought. Chapter 31 of the technical manual provides further guidance on this.

Calculation of contribution to be claimed under an IPA or lPO excluding the retention of any surplus.

In all cases where the initial assessment of whether or not an lPA/lPO is appropriate takes place on or after 1st December 2010, the full amount of surplus income if above £20 should be sought by way of monthly payments under an lPA (or and lPO if an IPA cannot be agreed). This includes any cases which were initially assessed at nil but in which a further assessment is made, for example as part of the early discharge process.

Application of new minima to existing IPA/lPOs reviewed following a change in circumstances.

Except with regard to applying the lower minima (see below) the basis of any re-assessment of existing IPA/lPOs as at 1st December 2010 will be that under which it was first agreed ie the sliding scale for the retention of the surplus be retained.

If upon review the amount available falls below £50 but is above £20 that amount will be taken and the IPA amended accordingly.

If the amount of the monthly IPA payment was previously set at the minimum amount of £50, when calculating the reduced amount the bankrupt can now afford, the bankrupt should be allowed to retain the full surplus (£50) allowed originally. For example if originally the surplus was £100, they would have retained £50 and the IPA would also be £50. If at the review the surplus is now £80, the IPA should be adjusted to £30 to allow them to retain the £50 surplus originally agreed.

If the monthly amount collected prior to the IPA review was greater than £50 the existing provisions apply in that the percentage scale of the amount to be collected should be applied in the same way as when the IPA was originally calculated, using the 50-70% contribution rate. However the amount of the surplus retained by the bankrupt should not fall below £50. For example, if upon review there is a surplus of £70, an lPA or £20 should be sought and the bankrupt be allowed to retain £50.

Other matters

Amendments are being made to the ''Technical Manual'', the ''Case Help Manual'', lPA calculator and publicity material, as appropriate
By mcuth
#239093 Thanks for the info Tim (and Fermi). "Ho Hum" is about right (or "Bah humbug"!)

At a time when the whole country is finding the going difficult, let alone the impending VAT increase and fuel going up all the time, I'm completely amazed that the IS have introduced something so inflexible. I know BR & a subsequent IPA aren't supposed to let you have an "easy life", but this seems a bit draconian...


(still, thankful that my IPA's under the "old rules"!)