Debt and redundancy

studiorex

I suppose the adage is 'I'm unique, just like everyone else' applieshere, but I hope some of this resonates with similar experiences people may have already observed or dealt with.

In a nutshell - I have debts of £52,000. I am on a DMP (with CCCS) that accounts for my spare £469 per month. I am married (OH does not work) with 3 kids (primary school and nursery age). I have been offered £36,000 if I take redundancy.

I am seriously considering taking them up on the offer as I feel (and know) that I am going nowhere fast. Assuming I do jump I can see three basic scenarios to dealing with my current debts;

Scenario 1
Offer F&F on my debts using £30,000 - £6k held back whilst jobhunting.

I recently received a letter from one of the banks (LloydsTSB) to say that they would accept £5,404 - which is actually less than the pro-rata'd payment they would receive this way. other creditors are Cahoot, M&S (credit card) and Northern Rock (does any tax paid count here!?).

We would receive JSA (contributions based) of £102. This would last for 6 months and then we would be assessed for income based JSA - I assume we would fail to receive any income based JSA.

BIG QUESTIONS - what happens if banks don't accept F&F offers? What happens if I am still unemployed after 6 months?

Scenario 2
Maintain current DMP and whittle the £36k down (will last at least 25 months, not including benefits).

BIG QUESTIONS - would banks even consider this? Would they even consider lower payments?

Scenario 3
Run off with £36k leaving wife to deal with debts.

BIG QUESTION - who could ever even consider this?

I am trying to be as concise as possible, but I have very little experience of either job hunting or dealing with debts following a lump sum.

Given the current economy I hope other people will find this post as interesting as I do!

Fiddlestick

studiorex wrote: »

We would receive JSA (contributions based) of £102. This would last for 6 months and then we would be assessed for income based JSA - I assume we would fail to receive any income based JSA.

I believe that if you receive a lump sump and use it to pay debts, then this would come under Deprivation of Capital as you would be "giving away" the money in the eyes of the DWP and it would have an impact on your entitlement to benefits.

I don't know much about this to be honest, but I've read about it elsewhere on the boards and I'm sure other people can come in and give more details.

Scenario 3
Run off with £36k leaving wife to deal with debts.

I'm going to assume that to be tongue in cheek...

Marisco

Hi Stud, When you say you are going nowhere fast, do you mean in work re promotion etc or with your debts? Are you manging to pay them just now without too much of a struggle? And what are your chances of getting another job quickly?

Tixy

Hi
What is your housing situation? Do you rent? mortgage?
Have you worked out what is your minimum monthly spend (if the debts were gone)? How long would the £6k last you if you don't find more work?
How likely do you think you will be to find more work in your industry (with full time hours and a salary that would allow you to remain solvent?)

How long have you been on your DMP? The longer you ave been on it the more likely they are to accept F&Fs. Are your debts still mostly with the banks or are they with DCAs?

studiorex

Marisco wrote: »

Hi Stud, When you say you are going nowhere fast, do you mean in work re promotion etc or with your debts? Are you manging to pay them just now without too much of a struggle? And what are your chances of getting another job quickly?

Definitely work side. And given they are looking to reduce workforce the opportunities are going to be fewer anyway.

Debtwise, with the DMP in place things are obviously tight, but not painful and debt is being reduced.

I have enough skills and experience that I could find another job fairly easily, although I'm not naive enough to think that present clinate is ideal for jobhunting.

What is your housing situation? Do you rent? mortgage?
Have you worked out what is your minimum monthly spend (if the debts were gone)? How long would the £6k last you if you don't find more work?

We currently own. Outgoings including mortgage would be around £1080 a month (little bit of wiggle room on groceries). The £6k would last approximately 6 months if nothing happened.

How likely do you think you will be to find more work in your industry (with full time hours and a salary that would allow you to remain solvent?)

We are lucky that we both have skills in a wide range of areas. Assuming we could shift the debt and finding something nearer to home (thus reducing travel costs) we could actually have a net salary of around £1300 and still have the same standard of living we do now.

How long have you been on your DMP? The longer you ave been on it the more likely they are to accept F&Fs. Are your debts still mostly with the banks or are they with DCAs?

We've been on the DMP 4 years. 3 out of 4 are with banks still. The other has been passed onto a DCA.

purpleheather2810

Given all of that information, I'd be inclined to take redundancy, offer f+f's and apply for as many jobs as humanly possible. It's risky, but you sound fairly positive about the prospect of finding suitable employment before Christmas....