Many people think bankruptcy means paying nothing. That’s true for some, but if you have surplus income, you’ll usually be asked to contribute.
The short answer
- An IPA is a written agreement to pay part of your income to your trustee.
- It lasts up to three years.
- It continues after discharge, which usually happens at 12 months.
- Payments are based on income left after reasonable household costs.
- If you won’t agree, the trustee can ask the court for an income payments order.
How is the payment worked out?
The Official Receiver or trustee looks at your household income and reasonable living costs. If there’s a surplus, you’re usually asked to pay most of it. A small amount above your costs may be left for unexpected expenses.
Can the payment change?
Yes. If your income or costs change, tell your trustee. Payments can go up or down.
How does this compare to an IVA?
In an IVA, you pay for five or six years. In bankruptcy, contributions last up to three years, but bankruptcy has other consequences, such as risks to your home. See is an IVA better than bankruptcy?
Common questions
Do I have to pay anything in bankruptcy?
Only if you have surplus income. Many people on low incomes don’t pay an IPA.
What happens if I don't pay my IPA?
The trustee can enforce it through the court, and failing to pay can lead to further action, including restrictions.
Does an IPA end when I'm discharged?
No. It continues for the full agreed period, up to three years from when it started.
Getting help
You don’t have to deal with debt on your own. Free, impartial advice is available from MoneyHelper, StepChange and National Debtline. If you want to talk through whether a formal solution such as an IVA could be suitable, you can also get in touch with us.