This is very topical for me to answer today, as I have been writing a variation proposal for a client which covers exactly the same circumstances as yours.
My initial advice to my client was to put the money in a high interest deposit account, releasing the equivalent of his salary each month whilst he looked for work. If an alternative position could be found in the meantime, then we would take a view as to the treatment of the remaining monies - which would then undoubtedly be deemed to be a windfall. Redundancy monies are not classed as windfalls unless alternative employment is found to mitigate any loss.
My client considered this for a couple of months, and has recently asked me to propose a full and final settlement to his creditors, on the basis of his remaining redundancy money. He has been unable to find work, but the worry of having an IVA hanging over him was too much to bear whilst he was seeking work. We will have to see what the creditors say.
The important thing to remember is that you have to live whilst you are looking for employment. I would not rush into a decision, and this will be tempered by how quickly you feel you could return to work. As you rightly say you are not affected until January 2008, at which time I assume you receive your lump sum. In the meantime you may find a job, in which case the redundancy pay will be caught by the IVA as a windfall, unless the new job pays a lower salary which I would set off against the lump sum.
Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
For further details contact me at
http://www.melaniegiles.com and view my IVA blog at:
http://melaniegiles.blogs.iva.co.uk
