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What is an Income Payments Order?: An IPO is an Income Payments Order and the trustee in Bankruptcy in England & Wales may apply to court for an IPO, which requires the client to make contributions towards their bankruptcy debts from their income. Historically, the court would not make an IPO if it would leave you without enough income to meet the reasonable domestic needs of client and their family. If the client has an increase or decrease in income, the IPO can be changed. IPO payments continue for a maximum of 3 years from the date the order is made by the court and may continue after the client has been discharged from their bankruptcy.

An IPA is an Income Payments Agreement where the client enters into a written agreement with their trustee to pay an agreed amount of their income to the trustee for an agreed period, which cannot be longer than 3 years.

Historically there were no fixed guidelines on IPOs or IPAs, with each case being assessed individually.

From 1 December 2010, two main changes came into effect:

1. the minimum amount that the Official Receiver (OR) seeks to claim under an IPA or IPO reduced to £20 a month. This will substantially increase the number of bankrupts required to make a 3 year contribution to their debts
2. the bankrupt no longer retains any of the remaining surplus income once all their reasonable household expenditure is accounted for. This now follows the same guidelines as for an IVA or DMP where the Common Financial Statement (CFS) is used

Existing IPAs and IPOs will continue under the present arrangements as will any subsequent variances throughout their lifetime.
Last Updated: 22/01/2011 18:39:10

Related Questions

Can the rental of a street market stall from a council (long term) be classed as an asset? It's an individual souvenir stall in West End. Can it be taken from me in a bankruptcy hearing?: This potentially could be an asset if it has any value – which may be intangible such as the goodwill attached to the pitch if it is well established. If you are considering declaring yourself bankrupt, it would be very wise to get a specialist business valuer to take a look at the terms of the lease to determine whether there is indeed value to be attributed to the lease – and also whether the lease terminates upon the making of a bankruptcy order, which is generally quite common.
I am currently on a debt management plan but am about to be made redundant. I want to offer my creditors full and final settlements with my redundancy money. Should I get my debt management company to do this for me or make the offers to my creditors myself?: Your debt management company should be licensed to provide debt adjustment services as well as debt counseling on a commercial basis. They should be experienced in negotiating full & final settlements with some or all of your creditors, but they are likely to charge a fee for doing this – normally a percentage of the debt reduction they achieve. For example: You still owe £5,000 on one debt and they negotiate the full & final settlement to £2,500. They would probably want a fee of approximately 10% of the reduction – in this instance £250. You would therefore pay £2,750 in total to get the debt satisfied. Creditors will generally want to know where you are obtaining the funds from. The advantage of using an experienced negotiator is that they will have extensive experience with all the major creditors, debt buyers and debt collection agencies with regard to their likely acceptance policy based upon the history of your Debt Management Plan (DMP). Offers can vary dramatically, as some the debt buyers may have only paid a few pence in the pound for your debt and to them an apparent low offer may look attractive. Conversely some of the major lenders have policies of not discounting settlement offers by more than 25% and in some instance 5% or not at all. What you pay for is their expertise and that is the consideration you need to make.
How long after making yourself bankrupt is it cleared from your credit scoring? And after 5 years, do you have to inform potential creditors of your bankruptcy when opening a bank account or completing other credit transactions?: Information is normally held on your credit file for 6 years from the date of the bankruptcy order – despite the fact that you may be discharged after 12 months. Once the bankruptcy is deleted from your credit file you do not need to volunteer the information, though some creditors will ask whether you have ever been subject to bankruptcy proceedings. This may apply to employers as well.