Applying to court for an IPO

December 2010

Part 6 Applying to court for an IPO

31.7.150 Arranging hearing date

(Amended July 2014)

Where an IPA cannot be agreed the trustee may decide to seek an IPO instead.  The application to court can only be made by the trustee when appointed, and the application must be instituted (made) before the date of discharge. An IPO can be made after the date of discharge as long as the application and report to court (form IPORAC) was submitted to court before the date of discharge [note 1] .  The trustee should contact the appropriate court (at least 6 weeks ahead) to fix a date and time for the court to hear the application (Chambers hearing), where the court fee (currently £155) is paid this should be included in the amount to be recovered under the IPO see Case Help Manual part Income Payments Orders, paragraph 8 for further information.

 

31.7.151 Notice to bankrupt (Amended June 2011)

The trustee must send notice of the application and of the venue to the bankrupt (the official receiver as trustee should use form IPONA) at least 28 days prior to the hearing date [note 2]. A copy of the application and the report to court (form IPORAC) setting out the grounds of the application should also be sent. A ‘certificate of service’ (Form N215) must be completed in its entirety by the person sending the IPONA and IPORAC forms to the bankrupt.  The ‘certificate of service’ should be filed at court within 21 days of service having been effected. 

The IPONA includes two consent forms which should be completed if the bankrupt consents to the making of an order under the terms sought.  If the bankrupt consents to the making of the order one of the consent forms needs to be sent to the court and the other returned to the official receiver.  The consent forms need to be sent by the bankrupt to the court and the official receiver at least five business days before the date fixed for the hearing if the bankrupt wishes to consent.

If the bankrupt does not consent to the making of an order, or fails to return the consent forms before the appropriate deadline (see above) the bankrupt is required to attend the court hearing and will be given an opportunity during the hearing to make representations as to why the order should not be made or the terms sought varied.

 

31.7.152 Attachment of earnings order in force prior to IPO application

Where there is an attachment of earnings order in force against the bankrupt, this is an order of the court and payments should continue until the order is discharged or varied. When making an application to court for an IPO, the trustee should draw the court’s attention to the attachment of earnings order in his/her report and the court may, if it thinks fit, discharge or vary such an order in order to secure payments by the bankrupt under an IPO [note 3].  The court’s attention may be drawn to the provisions of the IA86 at section 285(3) (limit on creditors’ actions) and section 346 (enforcement procedures), and the official receiver should seek the refund of any monies paid to the creditor since the making of the bankruptcy order.

 

31.7.153 Notice to judgment creditor holding attachment of earnings order

The trustee should give notice of his/her application for an IPO, accompanied by a copy of his/her application and explanatory report (form IPORAC), to any judgment creditor having an attachment of earnings order against the bankrupt,  to ensure that the funds subject to that order come within the scope of the IPO. The court may discharge or vary any attachment of earnings when making an IPO [Note 3].

 

31.7.154 Action following making of order

Once made, a sealed copy of the order (form IPO) is placed on the court file and a further copy must be sent by the trustee to the bankrupt [note 4] (form IPO under cover of form IPOSV).

 

31.7.155 Deductions at source

The order will either require the bankrupt to make the payments, or require his/her employer or other person regularly paying his/her income to pay the amount due to the trustee out of the income due to the bankrupt.  Generally, an order should initially be sought directing the bankrupt to make the payments [note 5] however, where appropriate, an order may be sought in the first instance directing a third party, usually the employer, to deduct the payments from the bankrupt's salary at source [note 6].  Further, where the bankrupt fails to make payments under the IPO,  the order can be varied seeking payments from the employer at source [note 7]. Where the order directs a third party to deduct payments at source, a sealed copy of the order shall also be sent by the trustee to the third party.

 

31.7.156 "Stepped" or "Staggered" order

The court can if necessary make a "stepped" or "staggered" order. This type of order requires the bankrupt to begin making payments with immediate effect but also allows the amount of the payments to be increased at a later date, e.g. three months after the order is made. Usually the circumstance where the court would consider an order of this type would be where the official receiver considers that part of the mortgage repayments should be disallowed because they are unusually high or because they include an element of arrears. During the (e.g. three month) period where lower payments are made by the bankrupt, he/she, would be expected to come to an arrangement with the mortgagee to accept lower mortgage repayments or to find alternative accommodation. See paragraphs 31.7.84 to 31.7.91 for further information regarding assessing mortgage payments and matters to be considered where the mortgage repayment appears excessive.

 

31.7.157 General review prior to obtaining an IPO

If necessary the official receiver may seek to vary the amount sought at the time of his/her application, if he/she becomes aware that  the bankrupt's income has increased or decreased since the original assessment of the contribution amount available for an IPO

 

31.7.158  Instructions to LTADT and collection agent following the making of an IPO

Once the IPO is effective, unless there are other assets in the case which mean that it is likely that the appointment of an IP trustee will be made, the case must then be passed to the appropriate LTADT to monitor collection.

The procedure for instructing the collection agents used by the Service to collect payments under the IPO and notification of the appropriate LTADT is the same as that used when collecting payments under an IPA. This procedure is detailed at paragraph 31.7.144 and 31.7.145. See also Case Help Manual Income Payments Orders Part, paragraph 12, “Can the case  go to LTADT?” 

 

31.7.159 Payments made by bankrupt before collection agent is instructed

(amended June 2014)

Should any payments be made by the bankrupt prior to instructing the collection agent, these must be entered on to the ‘payments’ screen of the case on Debt View paragraph 31.7.144 so that they can be taken in to account.

 

31.7.160 Collecting payments under an IPO where an Insolvency practitioner appointment is pending

Where there are other assets and an IP trustee is likely to be appointed at a later date,  the official receiver as trustee should still take action to secure the payments under the IPO (including instructing the collection agent) pending the appointment of a trustee other than the official receiver.

 

[Back to Part 5 Implementing an IPA] [On to Part 7 Review, variation and discharge of an IPA or IPO]

 

Further Information