Income payments orders (IPOs) under section 310 of the Insolvency Act 1986

Produced in partnership with South Square Chambers and BDO
Practice notes

Income payments orders (IPOs) under section 310 of the Insolvency Act 1986

Produced in partnership with South Square Chambers and BDO

Practice notes
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An income payments order (IPO) made under section 310 of the Insolvency Act 1986 (IA 1986) allows for the court to direct the income (or a proportion of it) of the bankrupt to be paid to any appointed trustee in bankruptcy (trustee).

An IPO shall require the bankrupt or a third party to make a payment to the trustee equivalent to a payment as it claimed in the order. A third party for these purposes is usually the bankrupt’s employer.

The amount to be paid under an IPO is set on a case-by-case basis. The payments will usually continue for three years but cannot continue beyond that period and may be varied on an application to court by the trustee or the bankrupt (whether before or after the bankrupt's discharge from bankruptcy).

In Official Receiver v Baker, on appeal it was held that income received after the date of the bankruptcy order but before the making of an IPO was capable of being included in an IPO.

An

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Jurisdiction(s):
United Kingdom
Key definition:
Insolvency definition
What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

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