When you are preparing to make yourself bankrupt it is vitally important that you complete the statement of affairs as fully and comprehensively as you can. The statement of affairs is about 35 pages long and is the document which tells the Official receiver all about you and upon which he makes his decisions as regards how he will administer your estate whilst you are under his control.

One section of the Statement deals with your income and expenditure. The difference between what you have coming into your household and what you spend is known as your disposable income. If you have what the Official Receiver deems too much disposable income, he will ask you to pay some to him. If you agree, this is called an Income Payments Agreement, if he has to get an order from the court that you pay money, this is called an Income Payments Order. Both are likely to run for 36 months.

When preparing your statement of affairs and setting out your expenditure it is important to note that the OR will have a set of allowances that he can allocate for various types of expenditure. If you have ever been in or contemplated an IVA, these OR allowances are by far and away more generous than would be allowed in an IVA.

There are separate allowances for a single retired adult, a single non retired adult, a single adult with two children, two adults with two children and two adults with no children.

Categories for expenditure such as housekeeping including cleaning, then allocate acceptable sums of money which would be allowable expenditure for a household dependent on its circumstances. So for instance the Official Receiver will allow a single retired person the sum of £181 per month for housekeeping including cleaning and he/she will be allowed £23 a month for clothing.

As you can imagine, there are a myriad of different expenses and allowances and so it is vitally important that every head of allowance is claimed and that the allowances are also utilised in full.

Any surplus income as I have said can be taken for your creditors. However the Official Receiver will only be allowed to take that an IPA from the surplus income from the bankrupt only, not from any other contributing party in the household.

The Official Receiver will only seek to take 60% of the available surplus income from the bankrupt.

This is a highly complex area and so it is vital to take professional advice to make sure you make the most of the allowances available.