An Income Payment Order (IPO) can be issued after you go bankrupt. If this happens it means you will have to pay your surplus income towards your debt for 3 years.
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What is a bankruptcy Income Payment Order?
An Income Payment Order (also known as an IPO) is a requirement for you to pay your surplus income towards your debts for 3 years. The Official Receiver may issue it after you go bankrupt .
To work out whether you will get an IPO the receiver will review your monthly income and expenses. An IPO will not be issued if you have no surplus income. However you will be required to pay your surplus if you have one, even if it is small.
If you accept the official receiver’s decision the payments are known as an Income Payment Agreement (IPA). If after reasonable discussion you still want to challenge the decision you can do so at a Court Hearing. However it is likely the Judge will agree with the Official Receiver and force an Income Payment Order (IPO) upon you.
If your partner contributes to the household income only your share of the surplus must be paid. Where your income is entirely state benefits you will not get an IPA or IPO.
How long does an IPO or IPA last
The length of an Income Payment Order is always 3 years from the date of issue. If you get an IPA or IPO you will still discharged from your bankruptcy after 12 months. However your payments continue until the end of the three year period.
If you are unable to maintain the agreed payment it is possible to get a payment holiday. Your payments start again if your income rises but the months you have missed do not have to be made up. The agreement will always finish after 3 years from the original start date.
An IPA or IPO can be issued at any time during the 12 months you are bankrupt. This would happen if you have no surplus on the start date but your income increases during the year. The payments then last 3 years from the issue date.
If you refuse to pay an IPO the court can issue an attachment of earnings so the amount is taken directly from your wages.
What of your income goes up or down?
Once an Income Payment Order or IPA has been issued the amount you pay into it is not fixed. It can change if your circumstances improve or get worse.
The official receiver has to be told if your income increases permanently. You will have to submit a new income payment order questionnaire (IPOQ). Where your surplus has gone up your payment will increase by the same amount.
In a situation where your income falls or your living expenses materially increase the official receiver can agree to reduce your payments. Normally you will have to provide proof of an increase in expenditures. For example public transport or fuel receipts if you have further to travel for work.
If you receive a bonus during an IPA or IPO you must inform the official receiver of this. It is likely you will have to had this over to them.