OR's disposable income calculation & allowances

[Reviva UK]

Hi
don't want to be a pain but you need to have a chat with one of the experts on the site over the phone to go through the income & expenses form.

This is a really important matter and understanding how it works is helpful. For example my clients have always been allowed a modest £ for christmas & birthdays as they happen every year. Childrens clother & shoe costs are both relevant and EXPENSIVE ( I have 4 girls so am an expert on expensive!)

Special diets requiring more than the minimum allowance for mere survival.

also notcied that you haven't got any car tax allowance, mot/ car service allowance ( £20 - £30 per month assuming 1 service per year £120, an MOT at £50 and maintenance such as tyres / exhaust etc)

[ianmillington]

Chris

I agree it's unclear. I'm sure that someone more experienced in dealing with benefits will post in due course, but I'm not aware of anything anywhere that says the OR absolutely can't take benefits into account. However, if the benefits are means tested then, by implication, the Treasury is saying that you require them for your basic domestic needs. On that basis I query whether if the OR was to apply for an IPO instead of an IPA it would actually be granted, because of the existence of benefit.



Also,

[ianmillington]

I agree with everything Paul says here.

From the link I posted it appears that the Insolvency Service also acknowledge that it's reasonable for provision to be made for a modest annual family holiday too which I think that neither of you have claimed for.

"As far as holidays are concerned, it is accepted that a bankrupt is entitled to a break from routine and some allowance may be made for a modest holiday. Luxury foreign holidays would be likely to upset creditors but an allowance for a cheap holiday of £60 - £80 per month, which would amount to £720 - £960 p.a., would seem reasonable for a family of four. Any extra would then have to be funded out of surplus income."

[jane.l]

I wouldn't dare put a holiday allownace in!

I tried to put a £15 per month contingency in so I could
save up for Xmas presents but was told it was not allowed!

[chris.g]

I saw that about the holiday, from what was discussed today with the OR and my hubby, it seems as if only the basic essentials were allowed. The OR told my hubby that she wouldn't be including the benefits so it seems even more unfair bearing this in mind. As for the extra's that are allowed, ie. car MOT, holiday, hairdressing etc, is it acceptable for me to add these onto my expenediture list?

[Reviva UK]

not wanting to sound foolish or flipant BUT

If you didn't get your hair cut in 3 years there would be a good chance you would loose your job or worse still trip over it. You might then be able to claim against the insolvency service for unreasonable behavious and take it to the european courts ( to whom we all pay homage to now)

If you don't have a modest holiday allowance you may become seriously depressed causing eventual job loss and therefore unable to maintain an IPA.

If you don't get your car serviced each yera it will DEFINATELY FAIL an MOT, which means that you can't get to work etc etc etc.

if your children are paying £80 per month each it is a little light and seriously effects you - The court allow a £100 household expenses allowance before inflation and any utility useage, so it seems to me that the OR can't have his cake and eat it and make you watch.

Don't forget I believe they have targets now for how many income payment orders / agreements and BRO's they get so they are just trying to do their job


This insolvency thing doesn't appear to be a science rather a black are and provided you are prepared to justify your position and push back in a reasonable and coherant manner you would be surprised what can be achieved.

[MelanieGiles]

I thought I had walked back to Victorian times with this post, and whilst I perhaps welcome the OR being a little harsher on income and expenditure - given the attitude of creditors towards insisting on frugal guidelines in IVAs - one wonders if the days of flat caps, cobbles and children cleaning chimneys have returned.

Your examiner certainly seems to have a Dickesian attititude, and as the other experts have said there is no harm in digging in and fighting your corner.

[ianmillington]

I thought bankruptcy was sold as the soft-option!

Chris - I'm now very confused. If the OR says that they are not going to include benefits then between you you and your husband have a negative ability.

According to the link, which is effectively the OR handbook then those additional items are allowable. You can't drive a car without an MOT, it needs servicing to keep it roadworthy etc. The holiday is an emotive subject I know but it is in black and white under Government Freedom of information. My guess is that if you hit the OR with this they would probably agree an allowance.

Hairdressing? Again an allowance is acceptable, according to my understanding. Jane's OR has allowed it whereas it doesn't feature anywhere in Chris's.

My understanding has always been that the sort of treatment you can expect as a bankrupt can to some degree depend on whose desk your file has landed on. Up to the time you present a petition you will obviously have been under considerable stress and as a result there is a clear risk that something will be overlooked. There also appears to be a lack of consistency applied in that different ORs seem to allow different things.

Chris - one thing please: How do your figures relate to a dispsable income of £90?


Ian

[chris.g]

£90 was the figure given to my hubby by the OR. She stated that there was a disposable income of £180 therefore the payment would be £90 - 50%. If the info I was given is correct, I understood that it was the amount over £99 that was used in calculation of any payment into bankruptcy, therefore that would mean she found £279 spare from the income, plus the £477 benefits.......I really don't know how she has calculated it.

[Skippy]

It's a shame that BR is such a grey area. It's supposed to take away the stress of being in debt but for a lot of people it doesn't have that effect. From what I've read about other people's experiences I was lucky with my examiner - she was quite generous with my allowances and was polite to me all the time.

Chris and Jane, please don't agree to the IPA's if you really cannot afford them. BR isn't supposed to be easy, but it's supposed to help you get back on an even keel and live without credit. If you are struggling to pay an IPA you could end up with more debts, and no-one wants to see that.

Good luck to both of you x

[chris.g]

The thing is this, what would happen if our circumstances change, eldest kids may move out, our benefits may change, rent may change etc, would the payment be reviewed?

The income from the board from the kids-who's income should that be included in, mine or hubby's?

Also, when I submit my revised expenditure list tomorrow, can I request that my hubby's list be updated or will he have to contact them himself?

[ianmillington]

Yes, Chris, it would have to be reviewed.

If this were happening in an IVA, the advice you'd get would be to speak to the IP. Just because you are bankrupt it doesn't mean you don't have the right to have your case reviewed by the Official receiver or one of the Assistant Official Receivers. It might be that as a result of that the position will change in your favour, particularly if you raise those additional items for which you are able to claim.

Ian

[MelanieGiles]

I have assisted several people of late in challenging the decision of Official Receivers on IPA issues (it does help that one of my Senior Managers in an ex-examiner) and I have to say that we have been successful on every count - so it is definately worth digging in on as Ian suggests.

[chris.g]

When I have my interview tomorrow, if I asked the OR-presuming it's the same one, think it will be as she did say she would have seen us together if she could have got a room, how she worked out my hubby's disposable income, would she tell me??? I understand about Data Protection, but as the expenditure will effect us both will they be able to discuss it? The thing is my hubby, bless him, isn't very assertive, he's just releaved it's over and is willing to accept the payment that the OR has stated.

[MelanieGiles]

I am sure that she will discuss this with you, and am very suprised that you were not interviewed together. Why not take your husband along with you to see if she can revisit his figures tomorrow.