How are IPA payments worked out?
After your bankruptcy, the official receiver will thoroughly investigate your situation. They’ll look at your income and spending, and work out if you have anything left over each month which could be used to pay towards your debts and the costs of administering your bankruptcy.
The official receiver will compare your spending to their own guidelines which are based on average household costs. They’ll take into account your individual circumstances, so if you have any unusually high expenses you’ll need to explain these. If there’s more than £20 left over each month after your essential living costs, you’ll be instructed to pay this to the IPA.
If your income is solely made up of benefits or state pension, the official receiver won‘t normally set an IPA.
When the official receiver works out how much they think you can afford, they’ll ignore some costs which they don’t think are essential. For example, if you spend £100 per month on tobacco, the official receiver will most likely add the £100 to your monthly IPA payment. This may mean you can’t afford to keep paying for the items the official receiver thinks are unnecessary.
On the other hand, they’ll also overlook some income, so for example if you get disability living allowance (DLA) or personal independence payment (PIP), this won’t be taken into account when assessing how much you could afford to pay.
On top of this you may be asked to pay extra if you’re working because your income tax for the remainder of the year will stop, and only starts up again from the next April. You don’t get to keep the tax though - you must pay this to the official receiver as well.