How your Income and Expenditure is treated in a bankruptcy
Bankruptcy Income Payments Orders and Income Payments Undertakings
You are required, whilst completing the bankruptcy petitioning forms to complete a statement of anticipated future monthly personal income and expenditure. That statement forms the basis of whether or not you will have to pay over to your bankruptcy trustee the "surplus income" under a Bankruptcy Income Payments Order or under a Bankruptcy Income Payments Order or under a Bankruptcy Income Payments Undertaking.
Bear in mind when completing that statement that you will not be paying such things as unsecured loans, credit cards etc after the bankruptcy order has been made - You must not therefore include those monthly payments on the expenditure summary.
The reason why the Official Receiver ("OR") requires an income and expenditure statement from you is to establish whether you have any surplus income. If you have any surplus income after meeting everyday living costs the OR will require you to make monthly payments to him under what is known as an Income Payments Order.
Following the making of a bankruptcy order you will be required to produce periodic monthly income and expenditure accounts on the same basis as that produced by you in the bankruptcy petitioning forms. Again, the purpose of this account is to determine whether your income or expenditure has changed and whether or not you have any surplus income at the time of the updated statement.
Should it be shown that you do have surplus income then the Trustee in bankruptcy will discuss with you an appropriate sum to be paid monthly into the bankruptcy for a period of three years
To review the law in respect of bankruptcy and your "future income" click on the link.
To review case studies in respect of your "future income please click over the following:
Income payments orders - Case study Number 1
Income payments orders - Case study Number 2
Income payments orders - Case study Number 3
If you have any queries on monthly income & expenditure statements and the concept of "surplus income" in bankruptcy please contact Chris Parkman for free advice.