I'm scared they will take all my redundancy

[ali.r]

Hi,
I took an IVA out just over a year ago and have just this month been made redundant. I have gone through all your post and found this reply from you which could be relevant to my situation:

"How long have you been in the job, and are you expecting any sort of redundancy package? If so, this can be used to supplement your income in the meantime, but if you find a new job before this has been absorbed then the balance will be payable into the IVA as a windfall"

I am getting a redundancy package which comprise of the ex-gratia payment and Payment in lieu of 65 days.

However rather than finding a new job I would like to work for my self as a day trader. This is something I've been planning to do for the last 5 years.

So I'm not sure what to say to the company I've taken the IVA out. I would like to continue paying my current payment. However I do need some of the money from the redundancy package to start working for myself.
At the moment I'm thinking of not telling the IVA company of my current situation until I have started working for myself and have a regular income, otherwise I'm scared they will take all my redundancy package away from me and force me to find employment with another company which I really do not want to do. What should I do?

I appreciate any advice you can give me.

[MelanieGiles]

I couldn't possibly support you not telling your IP of your current circumstances, as you have a duty to do just that. I am sure that you will find them more than supportive, and probably be able to make some suggestions to you as to how you might establish yourself in trading.

No one can force you into finding employment, but your IP will want to see that you are acting responsibly and continuing to act in the best interest of your creditors.

[ali.r]

Thanks for the response Melanie, I had a few other questions regarding the above matter if you could kindly answer them if it's not trouble.

1 - My redundancy package consist of £8000 before tax (taxable) Time in Lieu payment for 3 months salary and £17000 (tax free) as ex-gratia. Can my IP ask for all of the £8000 or would I only need to give them 3xcurrent monthly payment (monthly payment of £600) I pay towards the IVA?

2 - My IVA contract mentions that I need to make payment into my IVA for at least 2 years. I'm currently 14 months into my IVA. Let's say all of the £17000 is payed into my IVA today and I stop paying any further payment. Does that still mean I've broken my contact? In essence I would have paid equivalent of 3.5 years payment of £600 per month.

3 - If my IP/creditors are not willing to help with the capital so that I can work for myself, or agree to an early settlement then is bankruptcy and option to me and would it be wise to do so? I don't own any assets such as house etc..

I really like to do the right thing both for my creditor and myself, as experience has showed me there's nothing better to be hassle free and be able to sleep at night without worries.

I would like to know what options are available to me and what I can negotiate before speaking with my IP.

Many many thanks again for your advise.

Best regards,
Ali

[janderson]

Hi Ali r

I am no expert but is it not possible to consider amiking a f+f offer to the IVA people with some of the money. It would speed up the IVA ending for you.




Good luck


John

[MelanieGiles]

Hi Ali

First and foremost redundancy money is paid to you as compensation for loss of office and should be used to supplement your loss of income until you find alternative employment. If you do find alternative employment in the meantime, then the balance of the money becomes a windfall and could be claimed by your IP for the benefit of creditors.

I'm sorry but I don't understand the relvance of the 2 year issue - most IVAs run for 5 years so I am not sure where the 2 year thing comes from. Could you please clarify that point.

Good point from John about the variation. I have certainly done this for clients in the past, however if you are going to offer a portion of your settlement to creditors, you need to be sure that you leave yourself with enough income to tide you over until you find work - or until your business is established sufficient to pay you an income.

[ali.r]

Hi Melanie, and thank you John for your post

The IVA is for 5 years. My understanding of the 2 years may be wrong. Here's what it exactly says in the contract:

"There's to be no variation within the first 24 months of the arrangement. After 24 months where there is a major variation to the terms of the arrangement proposed by me, which materially affects the estimated dividend to my creditors, the Supervisor will conduct any such business by postal resolution and will not be required con convene a meeting of creditors. Such resolution will be passed by a simple majority of those creditors voting. The creditors will not receive less than 28 day notice of any resolution of variation. To reduce the costs in arrangement the creditors will be notified of any variation in the next annual or final report."

As it happens my annual review meeting is due right now and my IP has been on the phone to me today for me to agree on the amount of future monthly payment to my creditors. I have only been made redundant 10 days ago and have not yet even received the redundancy money. So hopefully I haven't breached my contract of not telling them a few weeks sooner of my new situation.

Although being made redundant was not news to me as our department was bought over almost 11 months ago and we were all told that we will be made redundant. In that time I did contact my IP and informed them of the up coming situation and did try to seek advise from them. Their response was that they can't really do anything now until I'm actually made redundant.

Would you also explain in a bit more detail about offering a portion of the settlement into my IVA as John pointed out. For instance does it mean I offer half the redundancy money as settlement and keep the other half? Would I then have to continue making monthly contribution straight away or will I get some time off until I have sufficient regular income to pay into the IVA?

Many thanks and best regards,
Ali

[MelanieGiles]

The two year thing is just a bar on putting a variation together, so I am assuming that you have a bulk standard five year arrangement.

If you are serious about offering a full and final settlement from the redundancy money, you will need to work out how much you want to retain to cover your future living expenses until you can find a job or your business takes off, and then offer the balance in full and final settlement. Bear in mind that the higher the offer, the more chance you will have of getting it accepted.

[ali.r]

Thank you for all your help and advise. I have now informed my IP and they will get in touch with my creditors. It's really nice of you to provide such free expert advise for people who are in our situation, it's comforting to know there's someone to turn to get honest and independent advise.

Best wishes

[MelanieGiles]

It is my pleasure - and all of the experts are happy to give a little of their time to assist.