How are IPO and IPA payments calculated in bankruptcy?

The official receiver or trustee will not try to get an IPA, and the court will not make an IPO, if this would leave you without enough money to cover the reasonable domestic needs (the day-to-day living expenses) of you and your family. Your family includes everyone living with you who depends on you. This means children, and any adults who don't have an income. Your trustee in bankruptcy or the court will assess your 'reasonable domestic needs' by examining all the circumstances of your case. There is no fixed amount for an IPA or IPO and each case will depend on individual circumstances. We can provide guidance on what expenditure would be considered as reasonable.

You will have to give details of your income and spending in the forms that are completed when you petition for your own bankruptcy

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

• the minimum amount that the Official Receiver (OR) seeks to claim under an IPA or IPO reduced to £20 a month.
• the bankrupt no longer retains any of the remaining surplus income once all their reasonable household expenditure is accounted for.

Existing IPA/IPOs will continue under the present arrangements as will any subsequent variances throughout their lifetime.

An IPA or IPO normally runs for 36 months (3 years), starting on the date the agreement or order was made. The agreement or order will be made after the bankruptcy order and will normally last beyond your period of discharge from bankruptcy. The agreement or order will say how long it will run for.

Getting in touch with an insolvency expert for free debt advice is as easy as picking up the phone. Call the Re10 Debt Advice Helpline on free phone 0800 169 1536