If you are already bankrupt, we consider what you can do if the official receiver has asked you to make a payment each month which you cannot afford.

If you have been declared bankrupt, you may be asked to make a monthly payment towards your debt for three years. This is known as an income payment agreement (IPA)

You will be asked to make an income payment if the official receiver (OR) believes that you can afford to do so. The OR will make their decision on how much disposable income they believe you have.

Disposable income is the money you have left over each month from your income after all of your reasonable living expenses have been taken into account. If your disposable income is more than £20 a month it is likely that you will have to pay an income payment the OR.

Is your expenses budget correct?

If you have been asked to pay a monthly payment amount by the official receiver that you feel you cannot afford, one of the main reasons for this is that you may have given the official receiver incorrect information about your living expenses when you originally completed your bankruptcy application form.

The section in the bankruptcy application form concerning living expenses is easy to get wrong.

There are a limited number of specific expenses stated but there are not boxes for all of the possible expenses you will have to pay each month. Instead you are asked to include any other living expenses in a catch all box called “other essential payments”.

If you did not take bankruptcy advice when completing your application form, it is likely that you have not included a comprehensive list of our living expenses in this section. Your overall living expenses figure will therefore have been much lower than it should have been.

It is therefore likely that the official receiver believes that you can pay more than is really possible.

Revise your living expenses budget

It is absolutely vital to ensure the information that the official receiver has about your living expenses is correct.

If you feel that the information you gave about your living expenses when you completed your application form is incorrect you can ask your official receiver to allow to you re-submit your living expenses budget.

Before doing this you should look at a bankruptcy living expenses guide. This will give you information about all of the possible expenses you should remember to include in your budget so that nothing important is missed.

Once your revised budget is completed you can submit this to your OR.

If the living expenses that you missed from your budget the first time round are reasonable then it is likely that the OR will recalculate your disposable income and allow you to pay less each month based on the better reflection of what you can afford.

Have your circumstances changed?

One of the other reasons why you may find you are struggling to pay your bankruptcy income payment order is that your financial circumstances have changed and you can no longer afford to do so.

It is highly likely that over the three year period that a bankruptcy income payment order is in place, you may experience a reduction in income or your expenses increase.

If and when this happens you must get in touch with your official receiver straight away and ask to submit a revised income and expenditure budget.

The official receiver will review the changes and decide whether it is reasonable for your payments to be reduced.

Generally speaking if you have had a clear reduction in your income or a significant change to your living expenses, the official receiver will be sympathetic to your situation and allow a reduction in your income payments.

However, beware that if you are struggling simply because the cost of living has increased this may be a more difficult argument to win.

Speak to the official receiver

To avoid the stress and hassle of the official receiver demanding that you pay a bankruptcy income payment agreement that you cannot afford, it is vital that you submit a correct expenditure budget with your bankruptcy application.

If you are unsure how to do this you should get bankruptcy advice before completing the application form.

However you have already been asked to pay an amount that you cannot afford and believe you did not give the official receiver the correct information to begin with, the most important thing to do is speak to them and ask them about re-submitting your living expenses budget.

In the same way if your circumstances have changed, you need to speak to the OR straight away.

Very often people who are bankrupt are scared to contact the official receiver. However you should not worry and if you have legitimately given incorrect information or your circumstances have changed, the OR is there to help you resolve the problem and you should not delay contacting them.

 
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What to do next

If you are struggling with debt and are considering bankruptcy, visit www.beatmydebt.com
 
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