Bank statements will be used to check your budget. In some cases, proof of expenses can be requested. Obviously, if your budget has a surplus, this is a sign that you may be requested to pay contributions. If your budget includes high costs for discretionary items like entertainment you can expect these costs to be cut back. Other types of costs are more difficult, for example, high payments for overseas debts. The Official Assignee probably won’t be happy with this but if the debts were incurred some time ago, and stopping payment will cause financial hardship in another country, or leave your budget worse off, our experience is that the Official Assignee will probably consider this sympathetically. Sometimes we find that people overlook essential expenses which need to be included to provide an accurate picture. In one case we had a client who spent a large fraction of his weekly income on London public transport, but nothing has been included in the budget.
If you are asked to pay a regular contribution, the common reaction is to panic and say that this is unaffordable, but there are often things that can be done. We have had many client cases where contributions have been requested, but once further justification has been provided, or negotiations undertaken, our client and the Official Assignee have been able to agree on a smaller amount that both parties can live with. Usually we can negotiate this on your behalf, however, in a few cases we have found it helpful for our client to make direct contact with their insolvency officer and talk through their budget and present situation. If an agreement is still not possible, it may be possible to defer a decision about contributions for a period (say, 3 – 6 months) with no requirement to backpay once negotiations resume - when you are hopefully back on your feet a bit better financially.
In the past, if the bankrupt did not pay their contributions usually nothing happened. This has changed and there are recent cases in Australia where the New Zealand Official Assignee has taken Australian Court action to pursue contributions. In the cases that we know of this has only happened when the bankrupt has done nothing – no payment and no response to the Official Assignee’s request. The important thing is to respond on time and to negotiate if required.
If a payment amount is agreed, it should be paid on time. Contributions will usually be paid monthly, but a different payment interval can be discussed if this works better for you. If your income fluctuates some people find it helpful to negotiate a system of quarterly reporting and payment. If you find that you cannot pay an amount this needs to be communicated. In most cases, a reasonable outcome can be worked through with the Official Assignee.