Bankruptcy - Income and Expenditure case study 2 - Wages & Bankruptcy - Bankrupt's wife

This bankruptcy case study shows how the wage or salary of the non bankrupt wife or partner is considered when calculating whether or not there is any surplus family income - and what share of that surplus relates to the bankrupt husband.

Background to the illustrative case study

Tony is married to Sharon and they live in Truro, they own their own home and both 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 no. Tony would have to pay a lesser sum.

To calculate the figure for which an Income Payments Order will be pursued it is normal for the surplus of £400 to be apportioned rateably to Tony and Sharon's net income.

For instance if Tony's net income was £1,000 per month and Sharon's net income was also £1,000 per month then the Official Receiver would only request an Income Payments Agreement of £200 per month (that sum represents Tony's "share" of the overall surplus family income post bankruptcy of £400).

The actual calculation of each parties share of the surplus income is a bit more involved than this and there are further opportunities for reducing the monthly payment needed to be made.