December 2006

The provisions within the Insolvency Act 1986 to obtain either an income payments agreement (IPA) [note 1] or income payments order (IPO) [note 2] allow the official receiver or trustee to obtain an enforceable agreement/order with those bankrupts who have income in excess of their normal domestic expenditure, to make regular contributions to their estate. The concept of income payments orders (IPOs) was introduced by section 310 of the Insolvency Act 1986 as a means of enforcing voluntary contributions made to their estates by bankrupts with surplus income. The IPO requires the official receiver or trustee to obtain a court order and can be obtained with or without the consent of the bankrupt.

Since April 2004 (as a result of the enactment of The Enterprise Act 2002, referred to in the rest of this chapter as EA2002) [note 3] the income payments agreement was introduced to run alongside the IPO. Unlike purely voluntary contributions, an IPA is a formally binding agreement between the official receiver as trustee and the bankrupt that the payments set out in it will be made.[note 4] In effect, an IPA works in the same way as an IPO but removes the need for the official receiver or trustee to make an application to court for an order with the potential for time delays that may ensue. With the reduction in the discharge period introduced by EA2002, it is hoped that in the majority of cases where the bankrupt has income in excess of expenditure, an IPA will be obtained. It is envisaged that an IPO will be sought only in those cases where the bankrupt fails to consent to the proposed IPA or does not co-operate with the official receiver.

This chapter is divided into two sections, Section 1 covers Income Payments Agreements, Section 2 covers Income Payments Orders.

SECTION 1 INCOME PAYMENTS AGREEMENTS

This section is divided into five parts as follows:

Part 1 - IPAs Introduction (paragraphs 31.7.2 - 31.7.5)

Part 2 - IPAs Assessment of real disposable income (paragraphs 31.7.6 - 31.7.39)

Part 3 - IPAs Implementation (paragraphs 31.7.40 - 31.7.47)

Part 4 - IPAs Default (paragraphs 31.7.48 - 31.7.51)

Part 5 - IPAs Variation of income payments agreement (paragraph 31.7.52)

Annex A  - The assessment of real disposable income where the bankrupt's income is derived in part from state benefits (example calculations June 2009).

SECTION 2 INCOME PAYMENTS ORDERS

This section is divided into six parts as follows:

Part 6 - IPOs Introduction (paragraphs 31.7.53 - 31.7.58)

Part 7 - IPOsAssessment of real disposable income (paragraphs 31.7.59 - 31.7.65)

Part 8 - IPOs Application to court (paragraphs 31.7.66 - 31.7.69)

Part 9 - IPOs Contested income payments orders (paragraphs 31.7.70 - 31.7.72)

Part 10 - IPOs Operation of the order and default in payment (paragraphs 31.7.73 - 31.7.74)

Part 11 - IPOs Review, variation and discharge of the order (paragraph 31.7.75)

[On to Part 1 - IPAs Introduction]