Redundancy payment after discharge

Bramleyseadog

Hi Guys,

First post here and I'm pulling my hair out..

I was made Bankrupt 15/12/2011. At the time I managed to fight off redundancy, however, I am due to be made redundant at the end of this year (after I am discharged). I was told at the time of bankruptcy, that whilst undischarged, any redundancy would be claimed by the OR, but after discharge I would be free to keep it..

I have since been told otherwise, does anyone have any experience of this or can offer any advice - it will be a sizeable package I will receive (30k+).

Many Thanks

debtinfo

who has told you otherwise, The compensation part is an asset rather than income and so can not be taken if your redundancy date is after your discharge. If there is a payment for unpaid wages/Holidays that is income and so if you have an IPA then you may need to pay part of that over

Lou67

If you get your redundancy AFTER discharge, I am baffled as to why you would have to pay anything. If you won a million quid a week after discharge, you wouldn't hand it over, so why would you have to hand over redundancy after discharge. I don't see why the OR would even have to be informed.

Do check with the CAB or someone though (or call the OR but don't give your name; just say it's a general enquiry for a 'friend.')

Bramleyseadog

Hi, thanks for the replies... I am paying into an ipa, part of that states that for the 3 years it runs, any increase in "income" should be declared to the or, which I have asked them about, they wouldn't give me a definitive answer, just said wait til it happens then write to us!! I don't want to do that as I could probably get another role in my organisation, albeit, maybe lower paid... What I'm annoyed about is that earlier in the year I was told that after discharge, I would be able to keep any redundancy... I wouldn't even mind paying up my 3 yr ipa from it...

Mouse1812

Understand the distinction between income and capital.

Income is what you earn, the reward for actually doing something - ie work.

Capital is something of value which you own. Your house or car are assets, they have value. You might have acquired them from income or acquired them by windfall. It matters not how.

An IPA is linked to income not capital. Following discharge only income is relevant to the IPA not a capital windfall - remember all your pre bankruptcy assets (capital) have (or should have) gone to the OR anyway.

Redundancy payments can be a mix of income and capital. Part is compensation for loss of future earnings, that compensation is not earned so it is not income, it is therefore capital. If it is not income then it is not relevant to your IPA.

Part of the redundancy payment may be settlement in lieu of notice and holiday pay. That, as an employment right, was earned and is income. In all probability this income component will be small compared to the capital component.

Worry not, most of your redundancy will not affect your IPA. Just make sure it is after discharge.

dojoman

Great advice as per usual from DI and mouse, clearly explains the reasons about income and IPA where redundancy is concerned. Thank you again for putting down the facts and not some guesswork like others are tending to do.

Lou67

Mouse1812 wrote: »

Understand the distinction between income and capital.

Income is what you earn, the reward for actually doing something - ie work.

Capital is something of value which you own. Your house or car are assets, they have value. You might have acquired them from income or acquired them by windfall. It matters not how.

An IPA is linked to income not capital. Following discharge only income is relevant to the IPA not a capital windfall - remember all your pre bankruptcy assets (capital) have (or should have) gone to the OR anyway.

Redundancy payments can be a mix of income and capital. Part is compensation for loss of future earnings, that compensation is not earned so it is not income, it is therefore capital. If it is not income then it is not relevant to your IPA.

Part of the redundancy payment may be settlement in lieu of notice and holiday pay. That, as an employment right, was earned and is income. In all probability this income component will be small compared to the capital component.

Worry not, most of your redundancy will not affect your IPA. Just make sure it is after discharge.

Thanks Mouse, for clarifying what I said in my post above ^^^ My friend at work phoned the Insolvency Service about this today, as she is due to be made redundant in January, (which is a month after their discharge,) and the OR conformed that none of it would be taken. :cool: As I thought (and said,) if the OP gets redundancy after discharge, the redundancy money won't be affected.

alastairq

If you won a million quid a week after discharge, you wouldn't hand it over,

to go one stage further....Lou's quote above is one that is often proffered.....and no, the 'million quid' wouldn't be taken...after discharge.....however, if under an IPA [after discharge], any interest accrued from that million quid, is income [earnings].....and these can be included within the IPA!

Lou67

alastairq wrote: »

to go one stage further....Lou's quote above is one that is often proffered.....and no, the 'million quid' wouldn't be taken...after discharge.....however, if under an IPA [after discharge], any interest accrued from that million quid, is income [earnings].....and these can be included within the IPA!

Oh yes of course, but the OP mentioned that they had an IPA 'after' my post where I said nothing would be taken after discharge. So I didn't know then that they had an IPA. Of course, if there is an IPA and the person in question gets redundancy within the IPA term, then it could be affected. My friend who I was referring to has no IPA, ergo; she will not be affected.

alastairq

Lou..I wasn't particularly referencing the OP or anybody in particular.....just adding to the other observations regarding assets and income.....and how, during generalisations, the two become blurred in people's minds?

Much the same sort of confusion I see often on here, regarding cars and BR?

Lou67

alastairq wrote: »

Lou..I wasn't particularly referencing the OP or anybody in particular.....just adding to the other observations regarding assets and income.....and how, during generalisations, the two become blurred in people's minds?

Much the same sort of confusion I see often on here, regarding cars and BR?

No worries Alastair and thank you