Hi, My wife and I are just about in the final year. I am about to be made redundant.

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Markdj21

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Post by Markdj21 » Wed Jun 08, 2016 9:42 pm
Hi, My wife and I are just about in the final year (5) of our IVA.

I am about to be made redundant with a lump sum of £55,000 and will ask my company to pay £25,000 into my pension fund to reduce the amount I receive as a lump sum and tax liability (£30K cap).

My IVA is £400/month & have £4400 left to pay then the home equity test. It is unlikely that I will be able to remortgage so anticipating the IVA IP to extend another year. So in to total they will receive a £10,000 to the end.

I have been under redundancy notice for 3 years & every 6 months it got extended so wasn't worried & so haven't advised my IP. Last week I was advised that I leave in July.

During the last few years I have been applying for other jobs without success. I am 52 years old hence the issue. I have been frantically looking for another job but again no luck!

My IVA agreement allows me to keep 6 months’ salary whilst looking.

I have been tempted to not disclose the IVA as I would lose house everything if I can’t get another job. So would continue to pay the IVA out of the redundancy for the final year. I guess this would be frowned upon?

My wife works part time but this is decreasing owing to her health problems. I also have back problems which restricts the work I can do.

As employment looks unlikely I am considering going self-employed. It could take me some time to build my business (more than 6 months) and when fully running will be earning much less than I do now so would not be able to continue to pay the IVA or remortgage etc.

I am considering making an F&F offer of the balance of the lump sum after I take out 6 months’ salary. This would give them around £17,000 and me £13,000.

We have a 100% mortgage still and only paying interest so still have 25 years to go and I am 52!

Do you think this type of F&F would be acceptable to an IP? I don't want to approach them until I have my ducks in a row. If so should I go straight in with the F&F or discuss first with them?
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Foggy

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Post by Foggy » Thu Jun 09, 2016 9:04 am
If you have had notice of redundancy the money is due to the IVA. It is unlikely that the creditors will bargain with an offer that is theirs already.

Not disclosing the redundancy and being found out will, at best result in failure of the IVA and such things have, in the past, led to custodial sentences, so not advisable.

Hopefully you have an approachable IP and I would suggest discussing options with them.

They might take the offer of the share that was due to them (£17k) and then close the IVA on a "payments made to date" basis, due to the upcoming health issues and the low probability of you gaining enough income to keep it going (basically calling it quits).
My opinions are merely that .. opinions based on experience. Always seek professional advice.
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lifenoteasy

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Post by lifenoteasy » Thu Jun 09, 2016 9:18 am
You will need to pull as much evidence together to support any case for "payments made to date" and be very objective in your approach.
IVA started March 2011, Completed March 2016 and certificate issued 11 days after final payment. It was not always easy but then some of the best decisions aren't.
 
 

Lisa Thomas

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Post by Lisa Thomas » Thu Jun 09, 2016 1:30 pm
Given the redundancy was unexpected and will likely result in a higher than anticipated dividend you could put forward a variation to pay creditors a bit less. It's worth asking but ultimately they could insist upon the £17k and maybe the £4.4k too.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk
 
 

Markdj21

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Post by Markdj21 » Fri Jun 10, 2016 8:16 am
Thanks everyone.
So it looks like I might have to ask for payments to date and the redundancy money to be considered as F&F? is there much success in this?

Also, my redundancy is £55,000 so was going to ask my employer to pay £25,000 into my pension fund direct and therefore avoid high rate tax and only get effectively £30,0000 redundancy. Is this an OK think to do?
Thanks
Last edited by Markdj21 on Fri Jun 10, 2016 10:10 am, edited 1 time in total.
 
 

lifenoteasy

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Post by lifenoteasy » Fri Jun 10, 2016 12:21 pm
Unlikely to be accepted by your ip and they will ask for all realisable funds to go to iva.
IVA started March 2011, Completed March 2016 and certificate issued 11 days after final payment. It was not always easy but then some of the best decisions aren't.
 
 

kallis3

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Post by kallis3 » Fri Jun 10, 2016 12:26 pm
I took voluntary redundancy along with my pension a few years ago and offered some of the redundancy as a full and final and it was accepted.
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
 
 

Markdj21

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Post by Markdj21 » Fri Jun 10, 2016 3:01 pm
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Lisa Thomas

Given the redundancy was unexpected and will likely result in a higher than anticipated dividend you could put forward a variation to pay creditors a bit less. It's worth asking but ultimately they could insist upon the £17k and maybe the £4.4k too.
OK - might try that.
also the next question:
my redundancy is £55,000 so was going to ask my employer to pay £25,000 into my pension fund direct and therefore avoid high rate tax and only get effectively £30,0000 redundancy. Is this an OK think to do?
 
 

Lisa Thomas

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Post by Lisa Thomas » Mon Jun 13, 2016 10:20 am
I suspect your IP/creditors will want the whole lot Mark.

Your best option is to seek a variation and see what creditors can be convinced to allow you to retain.
It also depends on what the balance of your debt, interest and costs are - there could be sufficient to clear this in full.

How much is outstanding in creditor debts?
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk
 
 

Markdj21

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Post by Markdj21 » Tue Jun 14, 2016 8:11 pm
Thanks Lisa
I think my question was more along the lines of do I need to declare the full £55,000 or legally if I only get £30,000 because £25,000 comes straight from my salary / redundancy into my company pension effectively my take home pay would only be £30,000.
Note that the £55,0000 is pre tax so I guess a big chunk would go in tax.

I have no idea what the balance of my debt is as I get statements from some of the creditors but they show interest and I thought interest was frozen.

We owed around £50000 at the start and I think we were paying around 30% back. We pay £360 a month

Last question, so I have heard about a monthly payment variation but not a windfall variation. Is that what you mean?
 
 

Lisa Thomas

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Post by Lisa Thomas » Wed Jun 15, 2016 9:29 am
On the assumption that you are voluntarily opting to pay £25k into the pension fund the yes I suspect you need to declare the £55k and creditors need to accept whether to allow you to pay £25k into the pension.

If this is not a voluntary option as is automatically going to be paid into your pension then that would be different.

How long has your IVA been going and do you know the total receipts paid in?

the calculation will be something like:

£50k x 8% = annual statutory interest (A)
A x number of years passed plus estimated time to complete, say 6 months = B
£50k + B + 15% (est. costs) = C
C less total receipts = balance left to pay for 100% repayment.

A variation is just a term for varying the terms of your arrangement. In this case you could be offering credtors part of the money and asking to keep some however they are probably entitled to all of it (less the 6 months for income allowance) anyway so could well insist on all of the balance.
Last edited by Lisa Thomas on Wed Jun 15, 2016 9:35 am, edited 1 time in total.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk
 
 

Markdj21

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Post by Markdj21 » Fri Jun 17, 2016 9:33 am
HI

Thanks again

just gone through the paperwork.

Total debt at the start was £56,000
Payments are £370 per month
Started in Aug 2012
Paid to date: £17,000
To go: £5,500

Not sure what the fees are as it states:
Nominees Fees excl VAT = £4,000
Total Supervisory Fees Excl VAT = £4018
Disbursements = ££735
Other = £40

So not sure if that is approx £9000 fees or some of these are duplicated? £9K would seem extortionate!

Dividend is 31/£

I think part of my issue is that if the £25K doesn't go into the pension then even if I manage to get a modest job I would be paying high rate tax on all the earnings which would cripple us on lower wages and probably lose the home.

I am allowed to keep 6 months whilst looking for a job but given if I do get one it would be lower paid or would be paying higher tax would it be reasonable to keep what remained after say 3 months of looking to subsidise the lower income?

Really just looking for the best way to approach the IP and:
1) ask what I could reasonably ask for in terms of paying into the pension
2) How to ask to make this F&F / complete early and 3) Keeping some of the 6 months retained if I get another job, assuming that the IP wont accept F&F
 
 

Lisa Thomas

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Post by Lisa Thomas » Fri Jun 17, 2016 12:21 pm
If you completed now very loosely this is the balance to pay to clear everything off:

£85k including 4.5 years interest and assuming £9k are total costs.
(17) payments to date (have their been any other receipts like PPI etc?)
Balance to pay = £68k.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk
 
 

Lisa Thomas

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Post by Lisa Thomas » Fri Jun 17, 2016 12:23 pm
re 1) and 2) it's not up to the IP - it's up to your creditors to decide.

Ultimately I suspect they could reject any offer and insist on the full £55k (less the 6 months).
Last edited by Lisa Thomas on Fri Jun 17, 2016 12:23 pm, edited 1 time in total.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk
 
 

Markdj21

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Post by Markdj21 » Fri Jun 17, 2016 1:49 pm
Thanks for all your help.
I am not trying to avoid paying what is due - just to make sure that I try to save our home / can afford to live.

It won't be £55k as £30k is tax free and the rest is taxable so I assume I will receive net £45k less 6 months £15k so the IP will receive £30k.

My issue was that should I get even a low paid job the earnings from then on will be taxed at high rate and thus will struggle to meet the IVA payments.

Sorry - I hope this doesn't all sound selfish. We didn't get into debt through an extravagant lifestyle, far from it. It was primarily from my wifes serious illness not long after having children and not being able to work. Debt just spiralled.

So my very last question then so I can call them on Monday.

although I have applied for loads of jobs over the last year I have not even had an interview. Recently I got my first interview and there is a slim chance I could get it. However, it is a 120 mile round trip every day and my current car is over 13 years old and not economical either. It has a few things wrong so would not withstand more than a few months of the commute. Would I be reasonable to request to use the balance of the 6 months salary kept back to purchase a slightly newer for reliable / economical car?

Thanks in advance

Mark
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