Will I have to pay anything from my wages?

Writing off debts that one is unable to pay them even after their due and to provide an opportunity to start fresh is done by the process of bankruptcy. An individual can apply in the court to declare bankruptcy. This process helps a debtor overflowing with debts to write-off his loans and start afresh. But this does not come easy and free; the court seizes all the assets and properties of the debtor and freezes his bank account to collect as much funds as possible to pay of his debts. The court appoints an official receiver who looks into your assets and works towards sale of them to pay your debts. The debts that are not paid by end of the bankruptcy term can be written off.

How your debts are paid?
When you declare bankruptcy, the court seizes all your property and freezes your account. It is expected that you provide details of all your debts and assets in a genuine manner and co-operate with the official receiver to help speed up the process of repayment. In such situations, the official receiver might reach for all possible payment modes you can manage including monthly repayments from your wages.
The official receiver analyses your income and expense statement and verifies if you can make any monthly payments that can contribute towards debt payment. A portion of the income that is available after your normal household expenses can be used towards debt repayment. The payment amount is fixed by the appointed official receiver after careful analysis of your monthly expenditures including rent, housekeeping, bills, etc.

Income Payment Orders and Income Payment Agreements
The official receiver on analysing your monthly financial statement will verify for the amount that can be spared towards debt repayments. This repayment is normally carried on for a period of 3 years from the date of issue thought the bankruptcy period might end in a year. If the monthly repayment option is voluntarily agreed upon by both the official receiver and the bankrupt person, the agreement is known as income payments agreement. Some circumstances might lead to cases where you do not agree for the official receiver’s agreement upon which he can recommend the monthly repayment option to the court and you can also ask the court to re-verify the order. If the court agrees with the official receiver, you will be forced to accept for monthly repayments and this is known as income payments order. This can also last for 3 years from the date of court order issue. In both the cases, in situations where your wage structure or other circumstances change during these 3 years, you can ask the official receiver or the court to revisit the payment amount that has be initially decided.

In both the cases of income payment order and income payment agreement, it is the official receiver’s responsibility to decide whether you re eligible to take up monthly repayments or not and he also decides the amount in case you are able to take it up. He submits his report to the court along with the payment amount and period until which payment needs to be made. In case these terms and conditions drafted by the official receiver are not acceptable by you, you can take matters to the court. Many organizations offer free professional help in this regard and can be opted for before proceeding to the court.

How much do you have to pay?
The trustee or the financial receiver looks into your income and expense report and fixes a portion for debt repayment from the spare money. If your monthly spare income after deduction of essential expenses is about £100 or less or if your monthly income comes in mainly from state benefits, then the chances of the official receiver recommending an income payments agreement is very less. In cases where your monthly spare income is about £250, you will be liable to pay about 50% of it towards income payment agreement and for a spare income in the range £250-£350 calls for a 60% payment.

Also in cases where the levels of spare income is about £350-£500 the payable share is about 66% with 70% for a spare income of £500-£600. However, these agreements can be verified and modified by the official receiver or the court depending on the change in your financial status.
The monthly repayment option helps in maximum repayment options and works towards reducing your debts faster. It also adds an extra source by which your creditors can claim their money during your bankruptcy.

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