What is an Income Payment Agreement in Bankruptcy?

The law allows the official receiver or trustee in bankruptcy to ask you to agree to make regular payments from your income into the bankruptcy estate for a specific period of time (usually 3 years). This is an Income Payment Agreement (section 310A of the Insolvency Act 1986).

The payments will come from 'surplus income' - spare money you have after paying your living expenses. You enter an IPA voluntarily, but it is a written and formal binding agreement between you and the official receiver or your trustee.

The agreement can be varied if your circumstances change, but if you don't make the agreed payments, then your trustee may apply to the court for an order suspending your discharge from bankruptcy. This means that you would be subject to the restrictions of a bankruptcy order for longer. Your trustee can also ask for money to be taken directly from your wages to make the agreed payments, or take other legal action to recover the unpaid amounts.

Getting in touch with an insolvency expert for free debt advice is as easy as picking up the phone. Call the Re10 Debt Advice Helpline on free phone 0800 169 1536