Published in Debt Advice Features on Friday, March 30 2007

An Income Payments Order is similar to an IPA however you will be order legally by the court to make the payments into your bankruptcy estate. The terms of an IPO are stricter than that of an IPA and should be avoided where possible.

As of now, your employer may not be aware that you are bankrupt if an IPO is applied for and is granted then you will ordered to make the payments, if you do not agree to the order or dont make payments as the order sets out, then the court will contact your employer and ask them to make the contributions out of your salary. These could be quite embarrassing and your employer may not take a dim view on these sorts of matter.

It is highly likely that the court or the trustee once an IPO is obtained that they will contact your employer immediately so that the payments can commence as quick as possible.

Income Payments Orders are very rare and would only happen if you cannot reach an agreement with your bankruptcy trustee, they have to take this action as the creditors will want a report as to how much you bankruptcy estate is worth and how much they will be getting back, the administration of a personҒs bankruptcy is also very expensive and the trustee has to cover them costs somewhere.

The trustee will try and try to reach an agreement before taking the route of applying for an IPO, if the Trustee cannot then they will have enough evidence that you are not cooperating and will apply for the suspension of your discharge and the IPO.

The trustee will also ensure that you and your family have enough money to live on, he or she will not take money off you that you need in order to live, the request for contributions will be based on your surplus income, which means the amount they are requesting from you each month would be affordable to you.

If after trying to reach the agreement they do not get anywhere in resolving the matter and they have proof in writing that you can easily make the contributions, they will apply for the order and probably will be successful.

An IPA would always be more favorable to you rather then getting to the stage where the bankruptcy trustee has to apply for an Income Payments Order