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Bankruptcy Case Study In Respect Of "Your
Future Income"
Background
Tony is married to Sharon, they own their
own home and are employed on a PAYE basis. Jointly they receive
the sum of £2,000 per month take home pay.
Tony petitioned for his own bankruptcy
following a failed business venture that he entered into with
a friend of his.
The monthly expenses of both Tony and
Sharon amount to £1,600 excluding the unsecured debts of Tony
which are now not paid due to the bankruptcy.
QUESTION
Is Tony to be requested by the Official
Receiver to pay the sum of £400 per month under an income
payments order.
ANSWER
The answer is yes and no.
There is no specific guideline to follow
in the event that the income and expenditure account is done
jointly.
Firstly, you would have to analyse how
much Sharon brings into the home against her personal expenses
as to whether any surplus technically belongs to her.
If it is shown that the surplus actually
belongs to Tony as he is not paying income tax or paying his
unsecured debts then the income payments order would be made
initially for £400 per month from the date of the bankruptcy
order to the following 5th April for the total amount of the
surplus.
For subsequent years, Tony will recommence
paying income tax in the normal way. The income payments order,
therefore, would then reduce accordingly.
If, however, the surplus relates to an
excess of Sharons wages only, no income payments order would
be made.
It is therefore essential that all of
Sharons personal expenditure is itemised on the income and
expenditure form.
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