Considering bankruptcy - Advice on voluntary redundancy?

raypadams

Hi All

My partner is considering going bankrupt in the new year.

She is also considering taking voluntary redundancy. The package she would get would be around £4000. VR would be effective from 17 Dec. Would this money be taken off of her as part of the BRO if she went BR in the new year?

Obviously what would happen to the money she would receive as part of her VR is very important as to the decision we make. I am a full time mature studen and I do not work (well, I work in a pub part time at the mo until xmas) and we would need to buy a cheap car with the money as we would inevitably lose the car we have on finance now as part of the BRO. We would also need the money to live off until my partner found another job, but would this be considered?

Total debt including car finance ≈ £25000

Any help or advice would be very appreciated
Regards
Ray

JCS1

OR would take the redundancy money, leaving you with the basic pay, Pay in lieu of Notice and any holiday pay element .

Edit - from checking, Pay in Leiu of Notice is taken by OR.

raypadams

JCS1 wrote: »

OR would take the redundancy money, leaving you with the basic pay, Pay in lieu of Notice and any holiday pay element .

Thanks JCS1

All the redundancy package is made up of:
Full months salary for Dec
4 weeks pay in lieu of notice
Holiday pay (although no entitlement is left)
1 months redundancy (tax free)

so in her dec pay packet she would receive around £4000. From what you are saying she would need to hand over the 1 months redundancy (tax free), is that right?

Does it not make any difference that she would receive the redundancy before applying for the bankruptcy?

JCS1

Timing would be key, if you had essential items to buy (and could prove they were essential)..............

raypadams

Hmmmm.....yeah.

We would need to buy another car because we live in south wales and my kids live in Manchester. So we need a car to pick them up every couple of weeks. Would they consider that though?? because they're my kids not my partners and she would be the one going bankrupt?

Is that an essential item?

Would it be worth holding off applying for bankruptcy for another couple of months?

lol, lot's of q's I know, sorry!

maxmycardagain

you can hire a car with insurance for £40 for a weekend, the OR could come back at you with that suggestion....

(remember though, that most hire companies will onlt take plastic for payments)




http://www.enterprise.co.uk/car_rental/home.do?transactionId=WebTransaction7

LilyBart

Apologies for hijack, but a company for whom I do 95% of my work is in trouble. They're being very cagey at the moment with employees and those self-employed workers who work on contract, as I do, in a legal grey area that has accrued some employment rights simply by dint of it existing so long. As I understand it from speaking with the union, were they to terminate my contract, they would have to offer a package of as many months as the number of years I have worked for them. Have I understood correctly from JCS1's post that this money would then be taken by my trustee? And isn't redundancy money (or its de facto equivalent) supposed to be there for the person who has been made redundant to live on while they find another job/contract?
Thanks
Lily

JCS1

From the IS Technical Manual, Redundancy money not income but an asset:

31.5.14 Redundancy payments.

A bankrupt may argue that as he/she no longer has a job, any redundancy payment he/she receives will be his/her income. Case law has established that a redundancy payment represents compensation for loss of a job: Hindle v Percival Boat Limited [1969] 1 WLR 174, and Wilson v National Coal Board [1981] SLT 67. Although the amount of the payment is related to length of service and to the level of past salary, it does not constitute compensation for loss of earnings. A redundancy payment will be made to an employee dismissed by reason of redundancy, even if that employee immediately secures another job, and even if that job is at higher wages. 31.5.15 Protecting and realising a redundancy payment
A redundancy payment whether received before or after the making of the bankruptcy order should not therefore be treated as income and the possible subject of an income payments agreement or income payments order but as an asset and realised accordingly.
If the bankrupt has not received the redundancy payment at the date of the bankruptcy order, the official receiver should remind the bankrupt that he/she has an obligation under the provisions of section 333 to give the trustee notice should he/she acquire any property and that this includes the receipt of any redundancy payment. This reminder should be confirmed in writing. Where possible, the official receiver should obtain details of the payer, if it is a private employer or the Redundancy Payments Directorate if payment is to be made under the Employment Rights Act 1996, and arrange that the redundancy payment be made directly to the trustee.

JCS1

and ignore my first post, this states Pay In Leiu of Notice is classed as asset.

31.8.3 Examples of after-acquired property


Examples of some after-acquired property are as follows:-

1. If an award is made to the bankrupt under the Criminal Injuries Compensation Scheme, it may not be claimed where it relates to bodily injury to the bankrupt. The position where part of the award is in respect of loss of earnings is uncertain. It may be possible for the trustee to claim that part of the award which relates to past earnings, including those up to the date of the bankrupt’s discharge. However, advice should be sought from Technical Section in such cases. If the award has been used to purchase an asset, the trustee should deal with that property in the same way as for damages for personal injury (see (4) below). A right to or expectation of an award is not "property" within the meaning of the Act and does not vest in the trustee.
2. If there is a build up of funds in the bankrupt’s bank or building society account, the official receiver should consider claiming monies that are in excess of those necessary to satisfy the basic domestic needs of the bankrupt and his family. If the accumulation is due to there being an excess of disposable income, consideration should be given to applying for an income payments order.
3. Any redundancy payment or payment in lieu of notice should not be treated as income but may be claimed as after-acquired property. However, the official receiver, as trustee, should be satisfied, by contacting the bankrupt’s former employer if necessary, that the amount claimed as after-acquired property does not include any amount payable in respect of wages (which must be regarded as being income).