subject: Types of income that the Official Receiver can take for an Income Payments Agreement [print this page] Various income sources available to the bankrupt can be considered by the official receiver/trustee when making an IPA/IPO calculation, as follows : State benefits. An IPA should not be considered where the bankrupts income is benefit based. If other income is available then this can be considered. When this is added to benefits, it would be possible to check if there is surplus income, but any IPA can again only come from this non benefit income. Arrears of benefits received post bankruptcy. In exceptional cases some benefits received by way of lump sum representing arrears which are paid to the bankrupt after the bankruptcy order has been made can be claimed as an income payment. This can only be by way or a one off voluntary contribution. Pension Receipts Lump sums and income from an annuity can form part of an IPA. The Official Receiver will check at the outside, whether any such payments are likely to be made during the continuance of the bankruptcy and may seek an IPA later in the bankruptcy before automatic discharge, if pension entitlements commence during the period of bankruptcy. Periodic payments in respect of loss of earnings/personal injury. Payments in respect of personal injury for the injury itself will not form part of an IPA. Payments in respect of loss of earnings can be used within an IPA calculation. Payments in respect redundancy cannot form any part of the IPA as they are compensation for the loss of employment. Income arising from capital property. Most capital assets such as shares and property will vest in the OR. He will seek to realise these. Whilst doing so there is no reason why he cant include income from these in an IPA, eg share dividends and rental income. Tax refunds. Tax refunds from before and during the bankruptcy can be claimed by the OR. Income arising from nil tax (NT) coding. This will be collected by the OR and taken into account when calculating the IPA. It will only last as long as the nil coding. Income received from spouse/civil partner/partner. As with state benefits which supplement earned income, whilst it is acceptable to include the income of the bankrupt's partner as part of the total income received in to the household of the bankrupt, it should be noted that an IPA/IPO claim can only be made against the surplus arising from the bankrupt's income. Any calculation of surplus income for the purpose of obtaining an IPA/IPO should work out the surplus available having assessed total income and total expenditure of the bankrupt and his/her household, then proportion the extent of any total surplus arising against the income contributed by the bankrupt. Income from adult children and other adult members of household. In the same way as it is reasonable to expect a working spouse/civil partner/partner to contribute to the income covering household expenditure, it is also reasonable to expect that where adult children or other adult members of the household such as an elderly relative have an income, they will contribute to the household expenditure, if only to cover the cost of their food. Any contribution thus received should therefore be assessed against household expenditure within the IPA/IPO calculation, but it must be noted that an IPA/IPO claim can only be made against the surplus arising from the bankrupt's income.
Types of income that the Official Receiver can take for an Income Payments Agreement
By: Steve Thatcher
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