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Paying towards your debts after you go bankrupt

This advice applies to Wales

While you’re bankrupt, you might be asked to make payments towards your debts if you have money left over after you’ve paid for the things you need. The things you need are called ‘essentials’ and ‘reasonable living costs’.

You don't have to pay any money towards your bankruptcy debts during the bankruptcy period if either:

  • your only income is benefits
  • you have no spare money to pay towards your debts

You might still need to make payments for debts that aren’t part of your bankruptcy - for example, child maintenance or student loans. If you’re not sure what you need to keep paying, check which debts bankruptcy covers.

Check what counts as reasonable living costs

You only have to make payments if you have money left each month after you’ve paid for essentials and reasonable living costs.

Essentials are things like:

  • rent or mortgage
  • food
  • energy, phone and internet bills
  • child maintenance
  • house or car insurance

Reasonable living costs are things like:

  • clothes
  • holidays
  • after-school clubs
  • pets

The person who decides about your payments is called the ‘official receiver’. They have to consider your views about what is 'reasonable' or necessary spending for your circumstances.

If you’re not sure whether a payment counts as essential or reasonable, talk to an adviser. The adviser can’t decide if something is essential or reasonable, but they can help you work out what the official receiver might decide.

If you have to pay towards your debts

The official receiver will give you an ‘income payments agreement’ (IPA). The IPA tells you what you need to pay. An IPA usually lasts for 3 years.

An IPA usually means you have to make regular monthly payments towards your debts, although you could also be asked to make a one-off lump sum payment.

The official receiver might change your IPA if your income or expenses change - for example if you start earning more, inherit some money or have a baby. The official receiver might:

  • pause your payments
  • increase or decrease your payments
  • tell you to make a one-off payment

If you can afford what the official receiver suggests, it’s usually best to agree to the IPA.

You can ask the official receiver to change the IPA if:

  • you think it’s wrong - for example if they haven’t included a payment you think is reasonable
  • your circumstances change and the official receiver hasn’t changed the IPA

If you want to change the IPA

Contact the official receiver. You usually have to contact them within 2 weeks after they gave you the IPA. If you’re not sure, check the letter that told you about the IPA.

Tell the official receiver why you can’t afford the IPA. For example, if they haven’t included a payment you think is reasonable, explain why you need to keep making the payment. Tell them what you can afford.

If you’re not sure whether to challenge the IPA, talk to an adviser. Tell the adviser when you need to reply to the official receiver. If the adviser can’t give you an appointment before then, ask the official receiver to give you more time so you can get advice.

If you can’t agree with the official receiver

You or the official receiver can ask the court to change your payments. The court will make an income payments order (IPO). If you have a salary, the IPO will take payments straight from your salary.

The court might decide you should pay more or less than the official receiver decided. They might also tell you to pay the legal costs if they agree with the official receiver’s decision.

If you need a hearing urgently

Tell the court if you need the hearing urgently – you can tell them before or after you apply for the hearing. Email the court at rolls.icl.hearings1@justice.gov.uk – in your email, make sure you tell them:

  • what you need the hearing for
  • why the hearing is urgent
  • who needs to be at the hearing
  • how long the hearing’s likely to take
  • how long the judge is likely to need to read through the documents before the hearing

If you don’t know all of this information, tell the court in your email.

The hearing will normally be by video call using Skype for Business. If you can’t use Skype for Business, tell the court if you can use other video call software or if you want your hearing to be over the phone.

You’ll still have to apply for the hearing when the court replies to your email.

If you get a letter about an income payments order (IPO)

If the official receiver applies for an IPO, you’ll get a letter from the court telling you about a court hearing. You'll be given at least 28 days' notice of the court hearing.

You can either:

  • agree to the IPO, which would mean there won't be a court hearing
  • oppose the IPO, meaning you'd have to attend the court hearing and explain why you oppose it

If you agree to the IPO, you should tell the official receiver and the court at least 5 working days before the court hearing. You can use the forms the court sent with the letter about the IPO.

Talk to an adviser to help you work out what to do about the IPO. Tell the adviser when you need to reply to the official receiver. If the adviser can’t give you an appointment before then, ask the official receiver to give you more time so you can get advice.

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