Income payments order (IPO)
An income payments order will usually comes as a shock to people. Bankruptcy is not always the financial fresh start that it is perceived to be. If the Official Receiver thinks that you can afford to, you will have to repay some of your debts and bankruptcy costs for a period of three years. Please read on to find out how this works.
An income payments order is an order made by the court for you to repay some of your debts and bankruptcy costs for a period up to three years.
You will either have to pay the trustee directly or the person who pays you, such as your employer, will have to pay the trustee.
Please note that an income payments order must leave you with enough income to meet the reasonable domestic living needs of you and your family. An income payments order will not usually be made if your only source of income is state benefits.
How much will I have to repay?
As of the 01 December 2010 the income payments order will be for an amount equal to all of your disposable income. Prior to 01 December 2010 an amount equivalent to 50% to 70% of your disposable income would have been requested. It is the Official Receiver who will calculate your disposable income. A fair assessment of your financial position is supposed to be made based on the information that you write into the statement of affairs and the information that you provide during your interview.
Please note that an assessment is conducted on a case by case basis. This is where you can benefit from the knowledge of a bankruptcy adviser who can help you prepare your forms.
What payments and receipts are taken into account?
The Official Receiver will want to take all the family finances into account when calculating how much you will be expected to pay under the income payments agreement. This will include your income and your partner's income. Your partner's income is required to calculate what percentage of the household bills you should be contributing to.
You are asked on the bankruptcy forms to list your household expenditure. Please be ware though, there are some expenses that are not allowed. For example, gym membership, smoking and alcohol. Some expenses that you would not think would be allowed include mobile phones and holidays.
How can I defend the income payments order?
You can defend the income payments order by:
- Attending court and demonstrating why the order should not be made as applied for
- Accepting an income payments agreement
In all cases you should prepare an income and expenditure assessment.
Can I vary or annul the order?
Yes, you or the trustee can apply to the court to vary or annul the income payments order. If you are making the application then you will be required to make a statement laying out the grounds for your application.
