Can’t afford my Bankruptcy IPA Payments
- 20 Nov 2021
If you are bankrupt you may be making debt payments in the form of an IPA. But what can you do if you are struggling to pay these?
Included in this article:
- Will you have to make IPA payments?
- What if you think your payments are too high?
- What if your circumstances change during an IPA?
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Will you have to make IPA Payments if you go Bankrupt?
Once you are Bankrupt the Official Receiver will review your income and living expenses budgets. If you have any disposable income you will be asked to pay this towards your debts in an IPA (Income Payment Agreement) for 3 years.
To calculate your disposable income the OR will deduct your reasonable monthly living expenses from your income. The amount left over (if anything) is your disposable income. This amount is what you will be asked to pay each month.
For this reason it is very important that the living expenses information you include in your application is correct. If you provide figures that are too low or miss out expenses altogether the OR will set your payment at a level which is too high.
If you live with a partner or spouse the OR will calculate the household disposable income. You will only be expected to pay your share towards your debts.
What if you think your Bankruptcy Payments are too High?
You may feel the payments you are making are too high because you provided incorrect information about your income or living expenses. Where this is the case you can ask to resubmit your budget.
The OR will normally be reasonable about this if you explain that you made mistakes in the original information you provided. They should allow you to complete and submit a revised budget.
If you believe you missed expenses out completely you should include these in your new budget. If you did include a particular expenditure but you feel that the amount was too low you should increase this. However you must be prepared to justify the reason for the increase.
If you or a member of your family receives PIP or DLA payments this should be included in your income. However the same amount should be included in your expenses. Non of this can be put towards an IPA.
What if your Circumstances Change during an IPA?
Your circumstances may change during an IPA. A decrease in your income or an increase in your living expenses would both mean that you are no longer to afford the payments originally agreed.
If this happens you must inform the OR immediately. They will want to discuss what has changed and review your new figures. It is likely that you will be asked to submit a new income and expenses budget.
Given they agree that the changes are reasonable they will reduce your IPA payments accordingly. They could stop them altogether if you no longer have any disposable income.
When your IPA payments are stopped due to a change in your circumstances the agreement continues for the full 3 years. If your income increases again during this time you may be asked to start paying once again.
My bankruptcy was discharged 3 years ago and I have the discharge certificate for that. I was then asked by the insolvency service to enter into a 3 year IPA following my discharge. My last payment was in December 2021. How do I prove that I completed the IPA? I have spken to the insolvency service and they say they do not issue any confirmation of completion.
Hi Heidi
As far as I am aware, there is no confirmation issued by the insolvency service for the completion of an IPA. It is certainly not something I have come across or heard mention of. All I can assume is that if you do not complete your IPA payments as instructed, you will be chased for the outstanding balance…..
Were you making your payments to the Insolvency Service’s collection agent Advantis Credit? If so, perhaps you can ask them to confirm that the IPA is now completed?
Hi
I’m currently discharged from bankruptcy, but on an IPA. I downloaded your living expenses guide as a review for my expenditures ahead of taking a better paid role in a couple of months.
With things like life insurances etc, I don’t currently have policies. Would I be able to include a figure within my IPA recalculations to ensure it’s accounted for when I do then take on a policy post commencing this new role?
Hi Tony
There is no reason why you should not add budgets in for additional expenses after your income changes. Ultimately it will be up the OR to agree any changes to your IPA.
Once you get your new job you will need to let them know and they will send you out a new IPOQ to complete. You should include all the expenses there you feel you need. At the end of the day the worst that will happen is they say no.