Part 9 Enforcing an IPA or IPO following default – recovery action where bankrupt (or former bankrupt) co-operates
31.7.183LTADT Decision that IPA/IPO is no longer appropriate
Where Moon Beever has advised the LTADT of the bankrupt’s failure to maintain revised payment terms, and the LTADT is satisfied that an IPA/IPO is no longer appropriate (i.e. because of the loss of a job or a substantial reduction in income), the LTADT should inform the bankrupt that payments will be suspended until the situation improves, with a reminder that the bankrupt must notify the LTADT if things improve before the term of the IPA expires.
31.7.184Bankrupt’s circumstances do not improve during the period of the IPA/IPO
If the circumstances of the bankrupt do not improve and no further payments are received before the expiry of the IPA/IPO (which can be no later than three years from the date the IPA/IPO came in to force), the IPA/IPO will be treated by the LTADT as having lapsed and no further action will be taken to recover the payments due under the IPA/IPO. If the official receiver makes the decision to suspend collection under an IPA/IPO because of a change in the bankrupt’s circumstances, the LTADT must notify Moon Beever of that decision within 7 working days and the matter will be deemed concluded.
31.7.185Recommencing payments where bankrupt’s circumstances improve following lapsed payments (full explanation provided)
Where the bankrupt has provided a full explanation throughout, and subsequently informs the official receiver/ LTADT that he/she is again in a position to make the agreed payments under the IPA/IPO, they will recommence payments from that point and no attempt will be made to collect the missed payments, although the official receiver LTADT may need to consider varying the amount to be paid under the agreement if the bankrupt's circumstances have improved. Where the bankrupt subsequently recommences payments, the official receiver/ LTADT will issue a fresh instruction to Moon Beever.
31.7.186 Variation of the agreement to meet arrears following lapsed payments
If following a review or lapsed payments the IPOQ is returned and shows the bankrupt is still able to make payments from his/her income and there is no valid reason why the contributions have ceased, the official receiver/trustee should seek to recover the arrears outstanding by varying the IPA/IPO. This can be done either by written agreement with the bankrupt for an IPA or by application to court for an IPO. An IPA can also be varied by making application to court if agreement cannot be reached. See Part 7 for further information on reviewing or varying an existing agreement or order. To do this it will be necessary to calculate the total amount to be collected under the original IPA/IPO and deduct the amount of any payments already made. Once this outstanding amount has been established, the required monthly contribution needed from the bankrupt to repay this outstanding amount can be calculated, bearing in mind that any variation of the IPA/IPO cannot extend beyond the period of three years from the date the IPA originally came in to force [note 1] or the date the IPO was made [note 2].
If following a review the (former) bankrupt is not in a position to make high enough repayments for each of the remaining months of the original agreement or order to meet his/her total outstanding obligation, then the payments should be varied to the maximum monthly amount that he/she can afford, allowing for his/her reasonable domestic needs and those of his/her family. If the bankrupt can provide valid evidence that his/her total liability under the original IPA/IPO should now be reduced, the total amount to be collected can be varied to reflect that, and the repayment amounts re-calculated against the revised total.
31.7.188 Variation of the agreement or order to collect increased income
Where a bankrupt is asked to complete an IPOQ following a review, and this indicates that the bankrupt's circumstances have now altered sufficiently to provide an increase in his/her surplus, the agreement or order can be varied to collect the additional surplus income. This will increase the total amount to be collected under the agreement, but the collection period of the agreement cannot extend beyond the 36 months of the IPA/IPO as originally agreed. In an IPA the bankrupt's monthly payments can be varied by written agreement /exchange of letters, or, where it is not possible to agree the revised terms in writing, an application to court can be made for the amount of the IPA to be varied. An IPO can only be varied by making an application to court for the existing order to be varied, to collect the increased monthly surplus income. It must be noted that in the same way as when the agreement or order was originally calculated, the reasonable domestic needs of the bankrupt and his/her family must always be taken into consideration in any re-calculation.