An income payment order will usually come as a shock to people. Bankruptcy is not always the financial fresh start it is perceived to be.

If the Official Receiver thinks you can afford it, you will have to repay some of your debts and bankruptcy costs for three years. Please read on to find out how this works.

The court makes an income payments order for you to repay some of your debts and bankruptcy costs for up to three years.

You will either have to pay the trustee directly, or the person who pays you, such as your employer, will have to pay the trustee.

Please note that an income payment order must leave you with enough income to meet your and your family’s reasonable domestic living needs. An income payment order will not usually be made if your only source of income is state benefits.

How much will I have to repay?

As of 01 December 2023, the income payments order will be for an amount equal to all your disposable income. Before 01 December 2023, an amount equivalent to 50% to 70% of your disposable income would have been requested. The Official Receiver will calculate your disposable income. A fair assessment of your financial position should be made based on the information you write into the statement of affairs and the information you provide during your interview.

Please note that an assessment is conducted on a case-by-case basis. This is where you can benefit from the knowledge of a bankruptcy adviser who can help you prepare your forms.

What payments and receipts are taken into account?

The Official Receiver will want to consider all the family finances when calculating how much you will be expected to pay under the income payments agreement. This will include your income and your partner’s income. Your partner’s income is required to calculate the percentage of the household bills you should contribute.

The bankruptcy forms ask you to list your household expenditures. Please be aware, though, that some expenses are not allowed, such as gym membership, smoking, and alcohol. Some costs you would not think would be allowed include mobile phones and holidays.

How can I defend the income payment order?

You can defend the income payments order by:

• Attending court and demonstrating why the order should not be made as applied for
• Accepting an income payment agreement

In all cases, you should prepare an income and expenditure assessment.

Can I vary or annul the order?

You or the trustee can apply to the court to modify the income payment order. If you are making the application, you will be required to make a statement laying out the grounds for your application.