My husband has been told that he may be made redundant in the next month. He has been working for his company for 21 years so is due a pay out of around £38,000 should this happen. If we were to offer a full and final offer out of the money, would we have to pay back the original debt of £38,000 or near to the IVa amount of £16,000 over the five years. We have alreay paid £3192.00, obviously he will need to find a new job, so we will need some of the money to live on until this time. He also has a company pension, what would happen to this. Any advice please
I am really sorry to hear about the possibility that your husband could be made redundant. It must be a very stressful time for you, especially so close to Christmas.
Technically the redudancy pay your husband is entitled to is a windfall and should be paid into the arrangement. However it is obviously going to be necessary to help cover your expenses whilst he looks for alternative employment and the Supervisor of your IVAs will be aware of, and be sympathetic to this fact.
What you have to consider, is how easy it is going to be for him to find another job, unfortunately there are a lot of people being made redundant at the moment, and how much of the redundancy money you will realistically need to set aside to help cover his loss of income in the meantime.
You should really discuss the matter with the Supervisor of your IVA and let him or her know of what is potentially going to happen. £38,000 is a significant amount and your Supervisor will probably need to call a meeting of your creditors to inform them of the position. You may be able to make an offer to your creditors in one of two ways;
1/ Offer the creditors a proportion of the redundancy payment in full and final settlement of the arrangement. You will need to be careful that you will have enough money to live off though whilst your husband finds alternative employment.
2/ Retain the redundancy monies in a seperate savings account and draw any shortfall in your husband's income (the difference between what he used to earn and his jobseekers allowance and other benefits he may be entitled to)on a monthly basis, until he has found alternative employment. It is likely that once your husband finds alternative work any remaining balance would have to be paid into the arrangement in full, together with ongoing payments if appropriate. A word of warning though, you must be very disciplined about your use of the redundancy money and only use it to cover the shorfall in your household income until your husband has found another job.
I will keep my fingers crossed for you however, hopefully your husband's employers will come up with an alternative solution to their financial difficulties.
Kind regards, Elizabeth Pywowarczuk, Insolvency Practitioner.
If you would like me to advise you about an IVA and if appropriate propose one for you, please visit my website at www.liberta.uk.com
Here's an alternative strategy which is a bit sneaky but it just might wash, depending.
As it is it looks like from what Elizabeth says above there is a good chance of losing most of the money into the IVA eventually.
Engage a solicitor to set up a trust. Get the company to pay the redundancy money paid into the trust, not to husband (very important). Solicitors fees etc paid out of trust monies.
Terms of the trust only to allow a replacement income or 'top-up' of benefits (as Elizabeth suggests above) with no further money to be withdrawn until IVA is finished. So no difference in income as far as the IVA is concerned !
I think whether or not you could legally get away with this would depend on how well the 'windfall' clause in your IVA agreement was drafted. The solicitor should be able to offer an opinion.
All - feel free to pick holes! I can't believe no-ones been here before, but you never know.
I don't think that anything like that should even be looked at.
You are supposed to pay as much money back to your creditors as possible, not hide it away where no one else knows about it.
Your redundancy pay is supposed to fund your normal life until such time as you get another job, then the residue should be paid across to the IVA.
Whatever is left is a windfall, no getting away from it.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
I hope your husband doesn't get made redundant, bit if it happens I would use the money as income until employment is secured. Then anything left over should go into your IVA.
I agree - you need to contact your IP asap and inform them of the possible change in circumstances.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Liz is bang on and an eloquent piece of advice. I also don't agree with the go for broke advice as any IP worth his salt once your husband has been made redundant would investigate whats happened (to any?) redundancy money!
First priority is to fund yourself to live and pay into your IVA the monthly installment. However if creditors were happy to accept 16k then maybe they could be persuaded to accept say a further 25k leaving you with 13k (ignoring for the purpose of my example the funding of living and looking for a new job. If the letter of variation sent by your Supervisor indicates that your husband "maybe made redundant" and suggests that if that happens then at such time to accept whats in the pot now plus 25k of the Redundancy then I think they might go for it. It also depends on the mix of your creditors. No guarrantee though.
Remember redundancy is a windfall.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
First of all it is a widely accepted fact that redundancy money is not a windfall, but compensation for loss of office. So your husband should place the money in a high interest deposit account, and draw the equivalent of his current monthly wage each month until he either gets a new job or the money is entirely absorbed. Over this period he will be able to maintain his IVA contributions under current terms.
In the event that he does find a new job in the meatime, then the balance of any monies remaining does become a windfall - and would need to be paid over to the Supervisor. The idea of setting up a trust to avoid this would not therefore be necessary - even if you were to be permitted to do this which of course you would not.
If you wanted to take a gamble, you could offer some of the redundancy money to creditors by way of a fulll and final settlement, but you would need to ensure that you were keeping enough back to cover the period it may take your husband to realistically find another job. I personally would not take that gamble in today's economic climate - but would seek advice and guidance from your own IP.
Melanie - where on earth do you get the idea that redundancy money is not a windfall from?
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
Melanie - the only receipt that is not a Windfall is possibly a gift - awaiting to hear from you please
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
From what I have read of Melanie's post she has clearly stated that the redundancy money should be used to fund living expenses and maintain the IVA payments then IF employment is found, THEN any remaining money is to be classed as a windfall.
I follow a practical view of redundancy payments, which is also operated by the Official Receiver's office in bankruptcy proceedings and is widely accepted by all major creditors - in that a realistic sum of money needs to be retained to cover ongoing expenses until alternative employment can be sought.
I did say that the balance of monies would be captured as a windfall, but that is has to be fair for the debtor to firstly use some money over a realistic timescale, whilst showing that they are actively seeking work.
Perhaps this is a specific issue that ought to be addressed by the Standing Committee. I suggest that the debtor be able to retain up to six months salary to cover loss of income, subject to mitigation if an alternative supply of money has been received in the meantime - coupled with demonstration of efforts to seek work during the said period.
