As discussed earlier in the guide, you may have to make payments during your bankruptcy, but only if you can afford to. If you agree an amount with the Official Receiver it will be set up under an Income Payment Agreement.
Once you have been declared bankrupt, an Official Receiver will be appointed to investigate any assets you have and to assess your income and expenditure (how much money goes into your household and how much of it you need to spend on everyday essentials, such as your rent or mortgage, food, utility bills and travel costs). If this shows you can afford to make payments, the Official Receiver will ask you to commit to an Income Payments Agreement (IPA) – a legally binding written agreement between you and the Official Receiver (or your Trustee). These payments can last for up to three years.
What if I can’t afford the IPA?
Your IPA payments should reflect your surplus income (available income after payment of your day to day living costs), and should therefore be affordable to you. As long as your circumstances don’t change, you will be expected to make these payments for up to three years.
If you don't adhere to the payments laid down by an Income Payments Agreement, or you don't cooperate (for example by providing information you are asked to), your Official Receiver can apply to the court for an Income Payments Order (IPO).
This is a court Order that can be made, whether you agree to it or not. Once it's been made, an IPO works in a similar way as an IPA. If you don't make the payments laid down in your IPO, the Official Receiver could:
- ask the court to suspend your discharge from bankruptcy
- freeze any funds held in your bank account or take the payments directly from your salary, through an Attachment of Earnings Order
What if my circumstances change?
If your circumstances change, speak to your Trustee or Official Receiver, as they’ll be able to re-assess your situation. It could be that your income has dropped, or your expenditure has risen – requiring a change to be made to your payments.