Payments From Income During Bankruptcy
Updated for 2026
When you go bankrupt, the Official Receiver or Trustee will look at your income and essential spending to see if you have any surplus. If you have at least £20 left over each month after paying for all your essential living expenses, you may be asked to make payments from income during bankruptcy. These payments help repay some of what you owe to creditors.
If your main or only source of income is state benefits or a state pension, it is unlikely you will be required to make payments.
The Trustee claims any surplus income through either an IPA or an IPO.
Income Payments Agreement (IPA) in Bankruptcy
An IPA is a written agreement between the Trustee and the bankrupt person. It is a binding agreement that commits you to making regular payments towards the bankruptcy for a set period.
The amount is based on what you can reasonably afford after covering essential costs such as rent or mortgage, utilities, food, travel and childcare. The Trustee will carry out a thorough assessment of your household budget before setting the figure.
Income Payments Order (IPO)
An IPO may be sought through the court if a bankrupt person will not agree to a proposed IPA. If necessary, the court can arrange for an Attachment of Earnings Order to take the money directly from your employer, or have certain benefits redirected.
How Long Do IPA and IPO Payments Last?
Both IPAs and IPOs can last for up to 36 months (three years). This period can continue after your discharge from bankruptcy, which itself typically happens after 12 months. So even once you are discharged, you may still be making payments for up to two further years.
You may be required to make payments from any income, including private pensions, towards your bankruptcy. For more on how pensions are treated, see our guide to pensions and bankruptcy.
What Happens If You Miss an IPA or IPO Payment?
If you miss a payment, you will need to provide an explanation and arrange for any arrears to be paid. If the problem is longer term, for example due to a drop in income or a new essential expense, the Trustee can reassess your situation.
The Trustee may decide that an IPA or IPO is no longer appropriate, in which case you would no longer be required to make payments. However, if this happens, you must inform the Trustee if your surplus income rises again in the future.
If you miss payments and do not contact your Trustee about your difficulties, the Trustee may apply to the court for an order suspending your discharge from bankruptcy. The Trustee can also take steps to recover the money you owe.
Can You Reduce Your IPA or IPO Payments?
Yes. If your circumstances change, for example you lose your job, your hours are reduced, or you have a significant new expense, you can ask the Trustee to review your payments. It is always better to contact them early rather than simply missing a payment.
How Bankruptcy Costs Affect Your Budget
The cost of going bankrupt in 2026 is £680, paid as a one-off fee when you apply online. This fee is separate from any IPA or IPO payments. If you are struggling to afford the application fee, you may want to consider whether a Debt Relief Order (DRO) could be a more suitable option, as the DRO fee has been abolished and is now free to apply for.
Next Steps
If you are considering bankruptcy and want to understand the full process, read our guide on how to go bankrupt. You can also explore alternatives to bankruptcy such as an IVA or a Debt Management Plan.
This page provides general information only and should not be taken as financial advice. If you are unsure about your options, consider speaking to a qualified debt adviser.