Insolvency Service Income Payments Agreement

In accordance with section 310 of the Insolvency Act 1986 [note 11], the agent asks the court for an order requiring the trustee to fail or a third party (. B for example, an employer) to make periodic payments on the trustee`s income in the estate. Once a bankruptcy order has been issued, you will no longer have to make payments to most of your creditors, so you may have more income than you need to pay your daily cost of living. One of the objectives of bankruptcy is that creditors receive, if possible, at least some of what they owe. This means that if your income is high enough, you may be asked to contribute to your bankruptcy debts under an Income Payment Contract (PPI). An IAP can be agreed at an early stage as part of the bankruptcy proceedings, since the official beneficiary of the bankruptcy can establish the agreement and begin the recovery of payments under the agreement if he is a trustee and director before an agent is appointed. The legislation provides that the IAP is agreed between the liquidator and the official liquidator or between the liquidator and the agent. This is called the Income Payment Agreement (PPI). In recent years, IPAs have been applied to about 1 in 5 bankruptcies. Overall, it is preferable to cooperate and negotiate with the liquidator when asked to make payments for an income payment contract.

You should also note that if you have significant assets, a cancellation may be more appropriate. If you want to follow this path, you must act quickly after the bankruptcy order has been passed. Our business rescue experts will help you take decisive action to ensure your financial position. In assessing the amount that the liquidator can pay under an IAP/IPO, the liquidator or official agent must take into account the „reasonable domestic needs“ of the trustee and his or her family [Note 21]. The liquidator`s family is a person who lives with him and depends on it [Note 22]. The assessment of „reasonable national needs“ will be based on a review of all the circumstances of the case at this time. For example, a low-income liquidator may still be able to contribute to an IAP/IPO if the cost of living is low because he/she lives at a low price with his or her family or pays a low rent. On the other hand, they also neglect certain income, so that, for example, if you receive the Disability Allowance (DLA) or the Personal Independence Payment (PIP), this will not be taken into account if you estimate how much you could afford to pay.