Advice ref IVA and Redundancy

kroeger

I am looking for advice. My situation is that I have been in an IVA since May 2009. Monthly payment is £232. I have the opportunity of voluntary redundancy and am not happy in my job anyway. Currently aged 44.

Redundancy payout would be £18,000. I have contacted payplan regards the possibility of a full and final and have outstanding payments of approx £21,000 not including any equity realisation.

My house is mortgaged on interest only for £128,000. Worth approx £145,000 with a £5,000 early redemption penalty. I am married with 2 children under 18. Wife not currently working.

Is it possible to fail the IVA and go bankrupt instead? or would it be better to go for a full and final offer? I need to know if a settlement would be accepted before expressing my interest in voluntary redundancy.

Net monthly pay is approx £1850.

If bankrupt would it go in the paper?

Total unsecured debt at time of IVA was for £35,000.

I would like to go back into education to retrain as well. Look forward to advice.

trudij

hmmm - Im probably not (actually, no probably about it - im definately not!) the best person to advise... BUT if you want opinions from us lot,

If it was me, Id definately talk to my IP about a F&F - you are almost halfway through the IVA, and that money has gone now - so it would be a shame to get this far and not have a go at finishing it....

You also have the added advantage that if they dont accept 18k as a f&f - if you still want to,you have the option to go br. (which I think does go in the paper - but only in a list with others - its not front page headlines !!)

In all honestly, Id talk to your IP and ask if they think a F&F of 18k would be acceptible - though I wouldnt say where its coming from yet in case you get told that if its there tis a windfall and they expect you to hand half of it over anyway.... (Charco - can you do that and not be too naughty - its not like the redundancy is definate??)

Its the two people who "do" IVAs you need really to help you out - I just hope that what Ive said isnt completely wrong !!

Good luck,whatever you decide to do

kroeger

Payplan know there is a possibility of redundancy. They said that they could submit an offer but that if it was not accepted, then it could all be sucked up under the windfall clause!!!!!!!

Charco_2

Quite right Trudij and no, that certainly wouldn't be too naughty...

Kroeger, I certainly wouldn't consider BR just yet and neither would I offer a Full and Final of £18k (if that is the redundancy you receive).

If you are made redundant you will no-longer have an income so you need to think of the bigger picture here. What are you going to live on until you find new employment?

It would not be unreasonable to hold back around three months wages to deal with the ongoing debts (mortgage and I'm assuming a car on HP not to mention food, heat/light etc and all the other essentials you have on your I&E)... the DSS will help you out with the Interest Proportion of your mortgage after three months of being redundant.

Negotiate! You have other pressing needs that this £18k is to help with, not just your IVA.

Your first offer to the IVA should be about £12k as a full and final (leaving you enough money to live on for three months to find a new job and a bit extra for the car HP). If this is rejected then you simply hang on to the full £18k and continue to make your monthly payments of £232 until you find a job (keep to your budget - £1850 a month). This could take six months!

kroeger

Thanks for the advice, do I not have to hand over the money under the windfall rules? would I not breach the IVA if this is the case?

Charco_2

Well, yes AND no - consider it special circumstances!
It's a windfall in that it's a quick lump sum but it's not really a windfall since it's also partly to cover the fact that you're now unemployed... It has to do you until better times so it's also compensation.

Your IP will want the whole amount ASAP but what happens then? You pay out £18k and then the next month you fail your IVA because you've no income - good luck with that!

If you offered to keep the money and continue to make the payments of £232 as normal until you got a job then you'd reasonably be allowed SIX months... You're offering instead to take 3 and immediately pay up the difference!

What happens if you cant find a job that pays as well as the one you're leaving? What happens if you cant find a job at all? (You cant afford your repayments and you go BR anyway, that's what happens!)

If you pay the IP ASAP, then that's what you are "a sap" - it's not really just a windfall, it's also a change in circumstances! So make the £18k work for you.

kroeger

So to be clear, is the fact that there is a windfall clause in my iva, mean that if I retain some of the lump sum that I would be legally breaking the agreement? what could be the consequences in the worst case?

Charco_2

If your granny died and left you the farm and you didn't bring that into your IVA then your IVA would fail and your IP would pursue Bankruptcy against you (The IP will only pursue the bankruptcy if he knows there is value in doing that, if your IVA fails because you cannot afford it anymore it is unlikely that the IP will pursue you).

However this is slightly different and what i've told you is a fairly normal way for this to pan out.

You wouldn't be breaking the agreement, you're re-negotiating it to suit a change in your circumstances. REMEMBER TO NEGOTIATE!

You simply can't afford to pay in the ful £18k because you will be stoney broke the following month or three until you find gainful employment again.

kroeger

Hi,

I can see the importance of negotiating. I will not have 100% confirmation on the redundancy for a few weeks. Should I ask my case officer at Payplan to put an offer of £12,000 to the creditors now? so that I know beforehand if they will accept the proposal?

I suppose what I am getting at is that if it looks like the creditors will not accept a full and final offer then I would not be minded to take the voluntary redundancy. Like the chicken and the egg, I need to know before committing myself!!!

The alternative option of taking redundancy and the creditors not agreeing a full and final offer, would be bankruptcy, as I would not be able to continue in the IVA. Bankruptcy would be a quicker resolution to my problems. What could I expect to retain of the money in that case?

My property is worth approximately £145-150,000 with a mortgage of £126,000.