Redundancy payment

cactuslove

My husband is being made redundant and he is currently 0n the 3 and a half year period of a 5 year iva. We understand that the iva has said they will take 50% of any windfall but we are not sure whether this is to cover original debt or to cover amount still on agreed iva. Roughly he owed 55000, iva was set to pay 20000 over the five years and he has roughly 8000 to pay. He is expecting about 76000 in redundancy so will they take about 38000 from him or 8000 to cover final payment. There is a big difference and it is hard to plan when not sure what is happening. We are recently married and would love a belated honeymoon.

althas

Hi Cactus

My advice would be to talk to your IP and ask the question. They will know the exact wording of the clauses in your agreement covering this. I would not like to speculate on an answer

I am sure someone will be along shortly with a better idea than I have, but at the end of the day, it will all be down to what your agreement has in place, and possibly some set laws governing IVA's

Either way, would you post the answer please when you get it, help add to our knowledge for future

Good luck and congratulations on the wedding, hope it was a good day

Charco_2

If the redundancy is large enough (as it seems to be) then you would be expected to pay the amount of the debts back in full, plus 8% statutory interest.

So not just the agreed sum of £8k and not just the £38k outstanding. But you can always negotiate!

Charco_2

I'm REALLY sorry (to be the bearer of bad news).

WORST CASE SCENARIO!
The 8% statutory interest is on the full amount of your debt PER YEAR

So you had £55k debt: multiply that by 1.08 three times (becomes £59,400 once, becomes £64,152 twice and) becomes £69,284... you've already paid £12k or so but by the time you add on your IPs fees it going to bring that back up to at least £65k again i would imagine!

You can ask (or get your IP to ask) if they will waive the interest. This would save you a bit but it's still a huge amount of money.

You could consider approaching your IP NOW to put forward the notion that your husband has the OPPORTUNITY of taking redundancy... if he does, then he would be willing to draw down a lump sum of about £15k or £20k to settle the IVA. If it's not accepted then he'll just keep on working - hopefully your creditors would jump at that but DONT TELL LIES... if he's already redundant this is not really an option.

One last thing to think about is, IF you pay over all your redundancy then what are you going to live on? If you have no other escapes then negotiate that you can retain a certain proportion of the money to live on until your hubby can find gainful employment again

cactuslove

It really seams that they are going to take everything and have nothing but dole to live off until he finds a job, maybe years. it was his decision not to go bankrupt and to try and pay as much back as poss but it seems they all want their pound of flesh. certanly when browsing forums ect it always says to be honest with your ip but why when all people are saying is they are going to take it all.

anniecave

Bear in mind that that amount of redundancy is taxable. I'm not sure exactly what the tax implications are, but check it out.

If someone is being paid a large amount of redundancy it means one or both of the following:

the employee worked in one place for a long period of time so are clearly a capable employee
they were being paid a reasonable salary so they are clearly well trained or educated or skilled or otherwise valuable

Unless he's very close to retirement age, surely he will be able to get another job (even if in a slightly different line or work, or a reduced salary?). Even if he is close to retirement age, if he has skills or knowledge then surely they are valuable anyway, so he's still likely to be able to find work?

What sort of job did he do? Has he looked around for work yet? If he is in a specialist field, has he tried any recruitment agencies? Has he tried spec letters to companies in his line of work?

The debt was his, now he has the opportunity to pay it back, and can look for a further job. The employment market is picking up at the moment!

McKneff

Redundancy pay is NOT taxable.

Charco_2

cactuslove wrote: »

It really seams that they are going to take everything and have nothing but dole to live off until he finds a job, maybe years. it was his decision not to go bankrupt and to try and pay as much back as poss but it seems they all want their pound of flesh. certanly when browsing forums ect it always says to be honest with your ip but why when all people are saying is they are going to take it all.

That's sort of what I'm saying to you though!

The IP is neither on your side nor against you, think of him now as the referee in the middle trying to keep both sides (You V Creditors) playing fair!

The rules say that you should make every effort to pay back as much as you can afford to within the five year period of your IVA... so if you get a large lump sum payment then you should pay it all in up to the amount of your debts plus interest and plus your IPS fees up to that point - unfortunately that would come to around £70k if i remember correctly which is roughly the amount of your expected payout!

However if you pay over that amount then you're going to have nothing left and no income to live on SO you cant actually afford to pay that amount over!

It is going to take £70k to finish your IVA as it stands but there's no reason why you couldn't offer your creditors £55k and ask them to accept that as full and final completion of your IVA - worst they can say is no!

Make sure that what ever you pay over is ther END of your IVA. No reason why you shouldn't try negotiate to keep the equivalent of six months wages for your husband to job hunt!