Four years ago I took out an IVA with Grant Thornton but I have recently been made redundant. I contacted GT and they offered me several options, 10% reduction of my monthly repayments thus increasing my payment plan by several months, to pay the rest off in one payment (this is my last year of paying the IVA) or they said the creditors could treat my redundancy as a windfall and take 50% of it but I would still be making regular repayments.
I have gone for the final payment option as it seems like the best option but it all depends on the meeting they have with the creditors. I can't see how they can treat my redundancy as a windfall as it's only money I would have earned if I had been still working and not a lottery win.
From what I gather, redundancy pay is a bit of a grey area - it could either be interpreted as normal income or compensation depending on how quickly you get another job. I've talked to an IP who suggests that perhaps it should always be viewed as normal income, but I am aware that some see it differently.
Your IP has recognised that you will struggle to make monthly payments whilst redundant, and sensibly suggested a couple of ways in which you could make an offer to your creditors - one of these seems to be to treat your redundancy pay as a windfall (this would suggest that your IP does not currently regard it as such).
I'm assuming that the regular payments you will make in addition to this will be affordable? If so, I would agree that this looks to be the most sustainable course of action.
If you were made redundant and subsequently found a new job paying exactly the same the money is a windfall as you suffered no loss and are effectively are better off. Creditors could insist on all the money and ongoing contributions so if are able to retain 50% that would be a good outcome for you.
Redundancy pay is not a grey area. It is compensation for loss of office, but is captured under the windfall clause. Most IPs will allow a reasonable sum to be retained - of up to six months salary equivalent. This is in line with the treatment the OR woud afford in bankruptcy.
MelanieGiles wrote:
Redundancy pay is not a grey area. It is compensation for loss of office, but is captured under the windfall clause. Most IPs will allow a reasonable sum to be retained - of up to six months salary equivalent. This is in line with the treatment the OR woud afford in bankruptcy.
Thanks for clarifying that. Your comment confirms what I was alluding to, though - that most IPs will allow a "reasonable sum" to be retained and that this is to some degree discretionary.
Thanks for the replies but I just cannot see how getting paid a redundancy package is the same as winning the lottery. Fair enough if I had actually walked into another job but due to the fact that there is a recession on it is becoming harder and harder each week to find a job so I'm having to use the my redundancy to live from day to day. If I were to end up having to give them 50% and then a few months down the line I'm still out of work and my funds run out they would bankrupt me and it will be even harder to get a job. It's bad enough now because some of the jobs I have gone for have done a credit check on me and have crossed me off their list because of my IVA.
When I started my IVA four years ago it felt like the weight of the world had been lifted off my shoulders (as corny as it sounds) but now it feels like I'm back at square one.
I was not sure if you had started a new job and also we do not know how much you received. However, if you do not find a job and your redundancy runs out I am sure that your IVA will be completed successfully based on contributions to date. Do not worry about being made bankrupt as it would not happen to someone like you who has done absolutely nothing wrong.
Thanks for that reply. I know I haven't done anything wrong it's just the feeling I have got from Grant Thornton is that the creditors are going to try and get basically everything I have got.
The funny thing is that my redundancy isn't linked in anyway to the recession. It's all down to the Co-op buying Somerfield last year and then selling the store I worked at to Morrisons who didn't really want it but had to buy it because it was part of a package.
I hope creditors accept your full and final and you can find a new job. I am sure GT would not have proposed the settlement if they were not confident they could get it accepted.
I hope you get it sorted senoj35, but the experts are right that you can keep some of the redundancy to fund your normal expenses while you look for further employment, but your creditors will want anything left over.
You will always owe the full amount until the IVA is concluded and so any extra will be welcomed, regardless of where it comes from.
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
Good luck with your proposal and let us know how you get on.
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
Hi Senoj35.i was in the same posistion as yourself earlier this year.I offered a f&f because of redundacy and it was accepted.i offered less than the payments that was left,it is a very hard job market out there at moment. Also what ever you pay to finish off your iva get a copy of the receipt,because if u have to claim benefits they will ask you were that money has gone.Good luck
That's good information Rhondda, and worth noting for any of our posters who are in the same position.
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
