# How long and how severe should the Income Payments Order be?



## Brendan Burgess (8 Jun 2015)

I have attached the opening statement by Chris Lehane the Official Assignee to the Oireachtas Justice Committee which sets out his views on the reduction in the bankruptcy term. 

It is particularly useful in that it sets out their policy on applying for an Income Payments Order, which seems reasonable to me.


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## 44brendan (8 Jun 2015)

This sounds very reasonable. However, I have some severe reservations on the current level of Reasonable Living Expenses. I have no first hand experience of living at this level but from dealing with clients I believe that a 4 year period on this level of income will be a tough ask for most. Perhaps I am somewhat cossetted and the amounts are "reasonable". Anyone out there who has been forced to this level of income and feel that it can be stuck to for a 4 year period without risk of family break-up or severe mental stress??


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## Stuboy (8 Jun 2015)

44brendan said:


> This sounds very reasonable. However, I have some severe reservations on the current level of Reasonable Living Expenses. I have no first hand experience of living at this level but from dealing with clients I believe that a 4 year period on this level of income will be a tough ask for most. Perhaps I am somewhat cossetted and the amounts are "reasonable". Anyone out there who has been forced to this level of income and feel that it can be stuck to for a 4 year period without risk of family break-up or severe mental stress??


I have had to live on this level and below for the past 6 years, it caused major mental health issues and marital breakdown. Am now facing another 5 years enforced IPO. After years of unemployment, retraining etc. we are now getting back to a decent income level, but anything we earn goes to the IPO. What's the point?


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## 44brendan (9 Jun 2015)

Stuboy said:


> I have had to live on this level and below for the past 6 years, it caused major mental health issues and marital breakdown. Am now facing another 5 years enforced IPO. After years of unemployment, retraining etc. we are now getting back to a decent income level, but anything we earn goes to the IPO. What's the point?


Why a further 5 year period Stuboy? Surely the whole basis of the process is that you are fully discharged after a maximum period of 5 years. Would you consider putting the details of your case together on Brendan's post requesting info from those who have gone through the process?
We need to have a system here that is fair but where there is light at the end of a reasonably short tunnel. You seem to have had a vastly different experience from Epi who went through the UK system.


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## Stuboy (9 Jun 2015)

44brendan said:


> Why a further 5 year period Stuboy? Surely the whole basis of the process is that you are fully discharged after a maximum period of 5 years. Would you consider putting the details of your case together on Brendan's post requesting info from those who have gone through the process?
> We need to have a system here that is fair but where there is light at the end of a reasonably short tunnel. You seem to have had a vastly different experience from Epi who went through the UK system.


Just to clarify Brendan, from 2009 - 2015 I was unemployed/on low income. My business went bust, I went back to work as an employee, they went bust, I had to return to college through a gov retraining scheme, got back into a job, they went bust. Eventually in 2014 I got a stable job (but am on rolling 1 year contract). In Jan 2015 was adjudicated bankrupt and had a 5 year IPO put in place, anything we (wife and me) earn above the minimum income level for a family of 4 is taken in the IPO. My point being that many people have undergone years of enforced hardship since the crash living week to week, and now, through an IPO, face a further 5 years in basic financial living conditions.

Re a submission to to the committee, yes I will be doing that.


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## 44brendan (9 Jun 2015)

Thanks' for the clarification Stuboy. My absolute sympathy for the anguish that you have been through over the last few years. I hope that as time progresses your position will improve.
I really think that many of would benefit from an insight into your own experience. Brendan Burgess has put up a separate posting asking for those who have been through the Irish Bankruptcy system to give us the benefit of 1st hand experience of the system. If you would consider putting up such a post it will help others who have no idea of what it all entails!


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## Brendan Burgess (14 Jun 2015)

I am trying to formulate my thoughts for a submission on this issue to the Oireachtas Justice Committee.  Here is my current reasoning...

1) The term of the bankruptcy period is not that important.   Shortening or lengthening the term won't affect  them that much.
2) The term and severity of the Income Payments Order is far more important to them.
3) It is not fair to ask someone who has struggled for 5 years before going bankrupt to live a further 5 years on the Reasonable Living Expenses. 
4) If a former bankrupt has very high earnings, they should continue to contribute to their debts. 
5) The maximum period for anyone to live on the RLEs should be 5 years, including the pre-bankruptcy period. 
6) They could have a further period of up to 5 years, where income in excess of twice the RLEs is paid to their creditors. 

Doubling the RLEs would mean that most people were not affected. But a very high earner would continue to contribute their surplus income towards their creditors.


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## Stuboy (15 Jun 2015)

Here's a question regarding the IPO's.
Let's make an assumption that the duration of Bankruptcy is reduced to 1 year. on the anniversary of my adjudication I am released from bankruptcy. if my income level at that point is insufficient to impose an IPO, is the process over? i.e. can they come after me again in 2 or 3 months or even a years time if my situation changes?


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## epicaricacy (15 Jun 2015)

Hi Stuboy

Unfortunately the process won't be over in the event of you not having a sufficient income level at the time of discharge. The dreaded IPO remains in place for the full term and tracks your income - i.e. it can increase if your income increases and reduces if your income decreases.


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## Stuboy (15 Jun 2015)

epicaricacy said:


> Hi Stuboy
> 
> Unfortunately the process won't be over in the event of you not having a sufficient income level at the time of discharge. The dreaded IPO remains in place for the full term and tracks your income - i.e. it can increase if your income increases and reduces if your income decreases.


 Is this the case even in the event that no IPO is in place when I am discharged from Bankruptcy?


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## Brendan Burgess (15 Jun 2015)

My understanding is that the OA must apply for the IPO before the bankruptcy period is up.

The OA's current policy is that where a bankrupt has fully cooperated he applies for an IPO of only one year beyond the three years.  So if you have no income, he will probably just not bother applying for an IPO.

If you have messed him about, he will apply for a 5 year IPO.

Brendan


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## epicaricacy (15 Jun 2015)

Brendan Burgess said:


> My understanding is that the OA must apply for the IPO before the bankruptcy period is up.
> 
> +1



Hi Stuboy

I thought you already had an IPO against you? If not - do everything you can to avoid it.


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## Stuboy (15 Jun 2015)

My situation is as follows:
I have an IPO in place, I will now have to leave my home to rent and allow the OA/Bank to sell the property. when my rent and minimum living standards are taken into account I will no longer have sufficient income to qualify for an IPO. Does that mean that I no longer have an IPO when it comes to me being discharged? or, because I once had an IPO will I continue to be monitored post discharge?


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## Brendan Burgess (15 Jun 2015)

Here is the actual legislation 

Bankruptcy payment orders.


85D.— (1) The Court may, on application being made to it by the Official Assignee or the trustee in bankruptcy, make an order requiring a bankrupt to make payments to the Official Assignee or the trustee in bankruptcy from his income or other assets for the benefit of his creditors (a ‘bankruptcy payment order’).


(2) *An application for a bankruptcy payment order may not be made after the bankrupt has been discharged *from bankruptcy, but where an application for such an order is made before the discharge of the bankrupt, the Court may make a bankruptcy payment order after the date of discharge as if the bankrupt had not been so discharged.


(3) An order made under subsection (1) shall have effect for no longer than 5 years from the date of the order coming into operation, and where, during the order’s validity, the court has varied the order under subsection (5) such variation shall not cause the order to have effect for a period of more than 5 years, and in any event, any order made under subsection (1) or varied under subsection (5) shall cease to have effect on the 8th anniversary of the date on which the bankrupt was adjudicated bankrupt.


(4) In making an order under subsection (1) the Court shall have regard to the reasonable living expenses of the bankrupt and his or her dependants and the Court may also have regard to any guidelines on reasonable living expenses issued by the Insolvency Service under the _Personal Insolvency Act 2012_ or by the Official Assignee.


*(5) The Court, on the application of the bankrupt or the Official Assignee or the trustee in bankruptcy, may vary a bankruptcy payment order granted under subsection (1) where there has been a material change in the circumstances of the bankrupt.*


(6) The court in granting an application under subsection (1) may order any person from whom the bankrupt is entitled to receive any salary, income, emolument, pension or other payment to make payments to the Official Assignee or trustee.


(7) For the purposes of this section, where a bankrupt is, or may become entitled to, payments under a relevant pension arrangement, an asset relating to the arrangement (other than payments already received by the bankrupt, or that the bankrupt was entitled to receive, under the arrangement) shall not be regarded as an asset.”.


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## epicaricacy (15 Jun 2015)

In Eng / Wales you continue to have an IPO for the 3 year period once it's been attached to your bankruptcy -  whether your circumstances change or not during the 3 year period. Even if your outgoings and income match, the IPO remains in place for if / when your circumstances improve. As far as I'm aware the same rules apply in Ireland.


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## Stuboy (15 Jun 2015)

That clears that up, I read it that I will continue to be monitored as if I had an IPO post discharge.


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## Brendan Burgess (15 Jun 2015)

If you mess the OA around, he will apply for a 5 year IPO just before you are discharged. He has the right to vary that order at any time. 

Most bankrupts engage with the process and he applies for an order of only one year.   I doubt very much if he is going to waste his time and money applying to the court to increase the IPO by €100 a month because you have got a new job. 

Brendan


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## Matthew Moore (16 Jun 2015)

There is a very important distinction that hasn't been mentioned so far. There are two methods by which the OA will seek excess income; an Income Payments Agreement (IPA) and and Income Payments Order(IPO)*.*

The OA will assess 3 weeks income shortly after adjudication. If the average income over these 3 weeks exceeds a certain threshold then the OA will seek to enter a 5 year IPA with the bankrupt. This process is outside of the courts process and can be altered with a phone call to the OA's office should any exceptional needs arise or income fluctuations etc. 

If the bankrupt does not agree to an IPA then the OA will seek an IPO through the courts. This process is much harder to vary and I have been told by the OA's office that this has only happened in less than a handful of cases. 

If you had an IPA for the duration of your 3 year bankruptcy, the OA must seek a IPO before you are discharged if he wishes to seek continuing contributions to your estate, otherwise, his IPA is unenforceable once discharged. I believe they will seek a 1 year IPO at this point if the bankrupt has been cooperative.


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## Stuboy (16 Jun 2015)

Pat, that's interesting, as the payments I make to the OA are changeable on a phonecall/email should our situation change. Also it is reviewed every 6 months. So I presume that I have a IPA and not an IPO.


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## epicaricacy (16 Jun 2015)

[QUOTE   I doubt very much if he is going to waste his time and money applying to the court to increase the IPO by €100 a month because you have got a new job.

Brendan[/QUOTE]

If Stuboy has an IPA as opposed to an IPO the OA doesn't have to apply to the court to increase or reduce the IPA repayment amount.

Stuboy

If your outgoings and income 'match' - i.e. there is no excess once all your 'reasonable bills' are paid - after you find a rental property (and the rent is considered reasonable by the OA) ,it's likely that the OA will suspend your payments until your situation 'improves'. I'm not sure what can motivate a person to 'improve' his / her  'situation' in the circumstances you would then find yourself in - especially in lieu of the possibility that the discharge period may be reduced to one year.


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## Brendan Burgess (16 Jun 2015)

Hi Pat

Thanks for that clarification.  I had heard mention of an IPA and I had not realised what it was. I had assumed I had misheard.

It seems like a very sensible policy. 

Brendan


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## Brendan Burgess (23 Jun 2015)

Here is what the ISI glossary says

*Income payment agreement*
A written agreement between a bankrupt person and the Official Assignee to pay the Official Assignee his/her surplus salary or other income for up to 5 years, after Reasonable Living Expenses have been deducted.

*Income payment order*
This is similar to an income payment agreement but this is where the Court orders a bankrupt person to pay the Official Assignee his/her surplus salary or other income for up to 5 years after Reasonable Living Expenses have been deducted.


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## Nobizere (25 Jun 2015)

I've been living below the level since 2009. A small inheritance helped to keep the wolf from the door, but only to raise our standard of living slightly for a couple of years. We didn't pay any creditors as it was less than 10% of what we owe and they'd simply have gobbled it up without consideration. In all seriousness, another 5 years of that is onerous and serves simply to punish the people in bankruptcy.

We survive on €300 a month less than the reasonable living expenses. Is an IPA put in place even though there's nothing to offer? And as Stuboy and epicaricacy say above, why would anyone try to improve their lot if it's just going to be taken away anyway? It seems ridiculously stupid.


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## Matthew Moore (25 Jun 2015)

Nobizere said:


> We survive on €300 a month less than the reasonable living expenses. Is an IPA put in place even though there's nothing to offer?



No. You will be assessed by the Official Assingee within weeks of being adjudicated bankrupt. If you are below the RLEs then there will be no IPA. This is reviewed every 6months for the duration of the bankruptcy


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## Nobizere (26 Jun 2015)

Thanks for that Pat.


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