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If you are bankrupt and have more income than you need to pay for your own and your family’s reasonable day-to-day living expenses, the trustee in bankruptcy will ask you to make payments towards your bankruptcy estate for the benefit of your creditors.

Whatever your situation – our bankruptcy expert team is here to help.

The Trustee in bankruptcy may ask a bankrupt to enter into an Income Payments Agreement (IPA) and if the bankrupt refuses to enter into an IPA, the trustee in bankruptcy can apply to the Court for an Income Payments Order (IPO).

What are IPAs and IPOs?

An IPA is an agreement entered in between the Official Receiver or trustee in bankruptcy and a bankrupt by consent whereby the bankrupt agrees to make payments requested by the Official Receiver or trustee in bankruptcy.

An IPO is an order made by the court requiring the bankrupt to make the the payments as requested by the official receiver or Trustee in bankruptcy.

What are “reasonable day-to-day living expenses”?

The Trustee in bankruptcy will assesses what expenditure is ‘reasonable’ by examining all the circumstances of the bankrupt’s finances.

The Trustee in bankruptcy will take into account the reasonable day-to-day living expenses of the bankrupt and everyone living with them who is dependant upon them. This includes children and any dependant adults who do not have any income.

Below are some examples of expenses which can be considered reasonable:

  • Rent or mortgage payments (which are reasonable for the area lived in and the size of the Bankrupt’s family)
  • Food
  • Utilities such water, gas and electricity
  • TV licence, TV and video hire
  • Household insurance
  • Car tax and insurance
  • AA/RAC or similar membership (if you still have your car)
  • Membership of a professional body required for a job
  • Prescriptions, dental treatment and opticians
  • Payment under a maintenance order or Child Support Agency assessment
  • Mobile phone (a reasonable monthly cost)
  • Clothing
  • Holidays
  • Extra curricular activities for children
  • After school clubs
  • Pets
  • Rent arrears

There is no fixed amount for an IPA or an IPO and each case will depend on the bankrupt’s individual finances.

The Trustee in bankruptcy will only ask for an an IPA or an IPO if a bankrupt can make a minimum payment of £20 per month.

The bankrupt’s spouse or partner’s income will also be taken into account when calculating the amount payable because it is assumed that they will also contribute to the household expenses.

How long does an IPA or an IPO last?

IPAs and IPOs usually last for up to three years.


We can assist individuals by both defending a proposed IPA or an IPO application and negotiating the sums payable. Call our expert bankruptcy team today.

If you are bankrupt and the official receiver or your trustee in bankruptcy has contacted you regarding the making of an IPA or an IPO application please do not hesitate to contact us should you require any assistance.

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