Is it true if I file for bankruptcy I will loose 45% of my wages to pay my debts?
If you go bankrupt the Official Receiver will determine how much extra money you have available each month after meeting 'reasonable' expenses and you may be required to repay a portion of that for one to three years. This payment arrangement is called an Income Payment Order (IPO)
The concept of income payments orders (IPOs) was introduced by section 310 of the Insolvency Act 1986 primarily as a means of enforcing what were essentially voluntary contributions made to their estates by bankrupts with income in excess of their normal domestic expenditure. The IPO requires the official receiver or trustee to obtain a court order and can be with or without the consent of the bankrupt. The Enterprise Act 2002 (hereafter referred to as EA2002) introduces the income payments agreement (IPA) to run alongside the IPO. Unlike purely voluntary contributions, an IPA is a formal binding agreement between the official receiver as trustee and the bankrupt that the payments set out in it will be made.
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, this is obviously of significance. 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.
If the court feels you have be reckless with your financial affairs they can issue a bankruptcy restriction order requiring payments for up to fifteen years.
If you would like to discuss your specific situation with a bankruptcy expert before you petition for bankruptcy, use the Bankruptcy Assistance Service.
Thank you for letting me help you.
If you have a bankruptcy question you'd like to ask, just ask using this online form. All help is free.