www.iva.co.uk

There is talk at my place of work of voluntary redundancies being offered soon.

I have just over a year to go in my IVA, and I wonder if I accepted voluntary redundancy with a potential payout of £40,000 could I just carry on paying my monthly repayments, or would I have to hand over the redundancy money?

If it's the case that I'd have to hand it over, I won't be taking the redundancy, I'd rather carry on paying, and hope they offer it again in about 15 moths!

The chances are that you will have to hand over the money and continue with your payments as it will be classed as a windfall.

Of course if just a proportion of this meant that you could pay your creditors back in full (plus fees)then anything extra you could keep.

One of the experts will confirm (or otherwise!)

I would wait in all honesty till there is something more concrete than talk. Speak to your IP by all means to get his or her take on things on a theoretical basis, but I'm with Jan here, I think you would have to hand it over.

Regards.

If there is talk of voluntary redundancies you could propose a full and final settlement at on or near the original dividend. If creditors accept you can accept redundancy and if they reject you can stay in work.

I believe creditors would accept such an offer and at least you would have funds left to keep you going while you seek a new job or perhaps start a small business. Speak to your IP and ask how much you would need to offer to achieve the original dividend and good luck.

I don't think it is as straight forward as simply asking for a variation to the proposal. I do not believe that redundancy can be offered as a full and final settlement as it is a windfall, albeit a windfall some would gladly exchange for job security.

Michael, I'm not quite sure your post comes across as intended. I don't think I would recommend a person accepts voluntary redundancy purely because their creditors were prepared to accept a full and final settlement to their voluntary arrangement. Yes the creditors are happy, but what about that person who is then unemployed? It is a huge risk to take. Unless that person has a fairly clear idea of whether or not they will meet the selection criteria in the event that it comes to compulsory redundancies, wouldn't they be best hanging in there and possibly still having a job at the end of it?

There are also a number of other issues to consider with redundancy.

Payment protection (I was thinking of mortgages in particular ) in the redundancy situation, for instance. If you have such a policy then it should be a primary consideration in the event of redundancy. After all you have been paying a premium for such protection for possibly a number of years and so when it comes to the crunch, rather than seeing all those premiums going down the drain, aren't you going to want to consider calling it in?

You would therefore, in my opinion, be wise to consider what happens to that policy in the scenarios of both voluntary and compulsory redundancy.

I believe there are some payment protection policies that do not payout in the event that voluntary redundancy is taken.

So there may be other factors to consider ...

Whilst, initially, you are financially better off, with your larger payout, will that payout allow you to continue to pay the mortgage and carry on a basic standard of living until you find yourself alternative employment?

If not then compulsory redundancy might be a better option in the longer term, given the current job market. At least you would have some comfort as far as your mortgage payments are concerned.

I take your point Cybus but if it was compulsory redundancy the money would be a windfall and creditors would be entitled to it all. Also the client said that if he would lose the money he would wait and then hope to take redundancy after his IVA so he must feel confident of finding other employment or has had it where he is.

I agree he should take financial advice concerning payment protection policies but being in an IVA the only one likely to be there is for a mortgage which he may not even have.

My main point was that do not accept any redundancy until you have had creditors agree to a full and final. At least that way the client will be able to retain some funds which would all be at risk if he received them before a variation was called.

Ive been on long term sick since entering into my IVA and Im now being made redundant and I will get less than £6K. My firm pays PPI and have confirmed this will continue after my redundancy due to my ill health for the rest of my IVA (3 years to go, which I have been subsequently paying into my IVA and they have accepted. Will my creditors expect to receive all of this as a windfall, as I cannot work ever again and need this extra money for my pension and living expenses for the future.

Hi Greeneyes,

You need to speak to your IP about this as I'm not sure what the stance is on it.

Hopefully one of the experts will be around later to comment.