After a bankruptcy order is made, you no longer have to make payments to most of your creditors, so you may find you have more income than you need to pay your everyday living expenses. One of the aims of bankruptcy is that creditors should receive at least part payment of what they are owed, if possible. This means that if your income is high enough, you can be asked to make contributions towards your bankruptcy debts under an income payments agreement (IPA).
If you don't agree to this, the court could make an income payments order (IPO).
This page explains when you can be asked to make an IPA, how they're worked out and what happens if your circumstances change.
If your only income is from benefits, you won't be asked to make an IPA.
If you have any income that isn't from benefits, such as wages or maintenance, you'll only be asked to make an IPA if you're bankrupt and you have more than £20 of disposable income each month after paying for you and your family's bills and day-to-day living expenses.
If you have more than £20 of disposable income each month but don't agree to the IPA, the bankruptcy trustee can apply to the courts for an income payments order (IPO). This would mean a proportion of your salary or wages would be paid to the trustee. You'll be given at least 28 days' notice of the court hearing. You can either:
Normally, if you have more than £20 disposable income per month you'll be expected to pay it all as your IPA or IPO payment. So the more disposable income you have, the more you'll have to pay.
Your disposable income is what's left after the reasonable day-to-day living expenses for you and your family have been paid. The official receiver will always consider your views about what is 'reasonable' or necessary spending for your circumstances, but these expenses would normally include:
Reasonable amounts of spending on other items may also be considered, including:
The following spending would not generally be classed as reasonable day-to-day living expenses, although there may be situations where you can argue otherwise:
If you're paying an IPA or IPO and your circumstances change, you should tell the trustee straight away. A change of circumstances could include:
You can find contact details for your trustee’s office on GOV.UK.
The trustee will look at the change in your circumstances and decide whether your IPA or IPO needs to be changed. Depending on the change in your circumstances, the IPA or IPO could be suspended, payments could be increased or you could be asked to pay a proportion of lump sum towards it. If the trustee won't agree to change the amount, you could ask the court to order that it is changed.
At the moment, the court might take a long time to arrange a hearing.
Tell the court if you need the hearing urgently – you can tell them before or after you apply for the hearing. Email the court at firstname.lastname@example.org – in your email, make sure you tell them:
If you don’t know all of this information, tell the court in your email.
The hearing will normally be by video call using Skype for Business. If you can’t use Skype for Business, tell the court if you can use other video call software or if you want your hearing to be over the phone.
You’ll still have to apply for the hearing when the court replies to your email.
'Income payments agreements and income payments orders' - from the Insolvency Service at www.gov.uk
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