is a disability lump sum gratuity a windfall?

[greedfighter]

If I receive a disability lump sum gratuity from the Veterans Agency is it classed as a windfall and do I have to pay it into my IVA or is it exempt.

[Adam Davies]

Hi
This will be seen as a windfall,I fear,best to speak with your IP
Regards

[MelanieGiles]

It depends upon the terms of your IVA. What is the money being paid to you for?

[greedfighter]

I have made a claim for noise induced hearing loss. If I am successful I don’t think it will be very much money (around £1200 - £1500 I am told depending on level of deafness.) If it is classed as a windfall then I will get to keep the first £500.00 (my IVA terms) and have to pay the rest into my IVA. My ISP has said he will have to wait and see how much it is but I don’t think this should make any difference either it is exempt or not. I have been very good during my IVA and I have raised all sorts of additional revenue to pay in to it over and above what the minimum is (reclaimed bank charges, religiously got better deals on my house, car insurance, downgrading car etc etc and managed to raise my payments by £120.00 per month generally budgeting etc. All in all creditors will get an extra £12,500 than that calculated in the original IVA. I really need to change my car now (this one has become unreliable)so would like to keep this money for that purpose. I will put this case to them at the time but really just looking for advance advice.Perhaps Im a bit stupid hunting around for better deals or spending time claiming back charges etc after all I dont get to keep the money but unfortunately I do have a conscience.

[Adam Davies]

Hi
Using the money to replace an unreliable car is a valid reason for keeping all the money
Good Luck

[ianmillington]

To me the definition of a windfall is something that would be classed as "after acquired property" if you were bankrupt.

Take this analogy. You get knocked down on a Zebra crossing and your leg is broken. You would make a claim under 2 counts - 1 for loss of earnings and 1 for the pain and suffering and a possible life-long limp you could have.

The claim for earnings would clearly fall into the bankruptcy (possible to IPO rules). That is logical due to the nature of the claim. The other elements would not normally be available to the bankruptcy as they are not compensation for financial losses.

Unless there is a loss of earnings element, I think you have grounds to keep it all, unless the proposal says............

Ian

[MelanieGiles]

I completely agree with Ian here - and I do specifically exclude personal injury claims from the windfall provisions in my IVA proposals.

[greedfighter]

Thanks. I only became aware of the fact that I was significantly deaf after a hearing test for a job interview.Until then I hadnt really noticed it myself it was other people who thought I was just ignoring them !. I could have actually waited and made the claim after my IVA had finished - it doesn't matter when the claim is made although obviously if I make the claim now the onus is on them to prove it wasnt caused by work whereas after three years the onus is on me to prove it was. I still have 3 years to go on my IVA. I was informed by the Veterans Agency that such payments were exempt from insolvency proceedings hence I have claimed now.It is a fixed lump sum between £1200 - £1500 if successful depending on level of deafness. Ian's point is the same as the Veterans Agency advised me but having rung my ISP and around generally there seems to be the general opinion that this only applies to bankruptcy and not IVA's. Personal Injury claims are not specifically exempted in my IVA terms.

Im almost sure my ISP will let me keep it in view of the reason and my conduct to date so Im not that worried about it, If not then obviously no new Bentley for me but thanks for all the advice anyways. Ill just wait and see !!!!!!.

[ianmillington]

I'd be very surprised if your Supervisor didn't let you keep it. Even in the most basic definition a windfall implies some sort of gain, which really isn't the case here. However I would acknowledge that so far as an IVA is concerned there is little written in stone, and to come back to Melanie's original point, it can depend upon the proposal.

However, to put your mind at rest, assuming your IVA is subject to the R3 terms (which being 2 years old it may well be) the relevant terms are:

"26 . Arrangement assets
Property other than Excluded Assets belonging to or vested in the Debtor at the date of
commencement of the Arrangement which would form part of the Debtor’s estate in a bankruptcy shall be subject to the Arrangement and be an asset thereof.
27. After-acquired assets
(1) [After-acquired property subject to Arrangement] Subject to the following Sub-paragraphs, the Supervisor may claim as an asset of the Arrangement any Property acquired by the Debtor between the commencement date of the Arrangement and the date of its completion and/or termination which would have been capable of being an asset of the Arrangement if it belonged to or was vested in the Debtor at the date of commencement of the Arrangement (“After-Acquired Assets”). Any such asset shall be subject to the Arrangement and be an asset thereof.
(2)[Limit on assets which may be claimed] Sub-paragraph (1) shall not apply to:
(a) such equipment, stock or other effects as are necessary to the debtor for use personally by him in his employment, business or vocation;
(b) such clothing, bedding, furniture, household equipment and provisions as are necessary for supplying the domestic needs of the debtor and his family.
(3) [Proviso for excess assets] After-Acquired Assets shall only be sold or realised to the extent necessary to repay the Creditors in full together with interest, if any, to which Creditors are entitled pursuant to the Arrangement."

You will note from clause 26 that bankruptcy rules are applied, thus if an asset could not form part of the bankruptcy estate the starting point is that it cannot be an arrangement asset either.

Hope this helps

ian