Income Payment Agreements Concerning Bankruptcy

This bankruptcy information is intended for residents of England, Wales, and Northern Ireland. You may refer to Scotland sequestration for details about bankruptcy.

Under certain circumstances, an official receiver who handles your case may impose an IPA or income payment arrangement after you are declared bankrupt. IPAs had been widely imposed in one our of 5 bankruptcies

How Does IPA Works?

When you declare bankruptcy, the official receiver will evaluate your financial situation right after. This includes checking your living costs and income each month. This is to identify if there’s room to spare some amount towards your debts and bankruptcy fees.

Your habit and mode of spending will be compared to the average household costs. This is done by the OR who handles your case. Every single expense is taken into account primarily the essential one.

If you’re on retirement years and merely depends on your benefits and pension, the OR will not impose an IPA or income payment arrangement.

Moreover, the OR will determine the amount you can spare, leaving the non-essential costs behind. Besides, the OR will also leave certain income such as disability allowance or DLA, or your PIP. This means, your PIP and DLA will not be included in your total income.

Aside from IPA, the OR can order you to put extra if you are employed. This happens due to the stop on your income tax in the remaining years, which can start up April of next year. In this manner, still, you cannot benefit from your tax refund as this will be surrendered to the OR.

Where to Pay for IPA?

Usually, you can pay to a company of solicitors that operates IPAs.

How long should I pay for IPA?

IPA lasts for three years. It can be imposed on the first month prior to your discharge. This means a total of four years for you to complete IPA payments.

Where do IPA payments go?

Your IPA payments are used to cover bankruptcy costs and fees and go towards your debt payments. Normally, creditors can only get a small percentage when payments are set through IPA.

What happens if I refuse to pay?

  • You will be contacted by the solicitor. If you refuse to settle or communicate they can take legal matters to court against you.
  • When you disobey the OR and have signed to agree with IPA, a court order can be imposed to obliged you.
  • Failure to make any payments allows the OR or solicitor have the right to take payments upfront such as your monthly wage.

What to do if there’s a change in my finance?

It is important to maintain communication with the official receiver. If there are certain changes in your situation, you must inform them right away. Since, IPAs can be adjusted to make it realistic and doable, informing your OR can help. If you failed to do so and paid less, legal actions can be imposed against you.

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