IPA and voluntary redundancy

Polly_Wolly_Doodle

Hi folks,
Does anyone know how to interpret the BR rules on redundancy payments.
When this is paid i am likely to be a few months off the end of my 36 month IPA but well over discharge - that was a year ago.

I can't work out if by being discharged means any income / assets are mine or if they fall to the trustee.

The AiB seemed to think the payment should be mine but disclaimed that by saying the insolvancy practitioners are goverened by different rules.

When we sat down originally with the IP she said any lottery win, inheritance etc would be claimed by them in the first year but after the first year any such money would be ours.

On that basis i have applied for voluntary redundancy but am now panicing that this may all go to the IP.

mattannar

I am not sure of the answer, but lottery wins etc in an IPA etc are classed as windfalls and OR's are not interested except for any interest they may get.
Whereas redundancy is income, so the OR may possibly take a closer look.

debt_doctor

Hi,

It seems that you are in Scotland. This is from the TM (for England and Wales)..........


31.5.32 Redundancy payments
Where an individual is made redundant they may receive compensation for loss of employment covering, for example, a redundancy payment, payment in lieu of wages (see paragraph 31.5.35), outstanding wages and/or holiday pay. A redundancy payment is compensation for the loss of employment. Although the amount of the redundancy payment is related to past salary and the length of service it is not compensation for loss of earnings URL="http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part5/part2/Part%202%20notes.htm#6"][COLOR=#0066cc]Note 6[/COLOR][/URL. A redundancy payment will be paid to a redundant employee even where the employee immediately starts alternative employment at a higher wage. As a result a redundancy payment is not “income” but property which vests in the trustee in bankruptcy. The official receiver should resist any attempt by the bankrupt to argue that a redundancy payment is part of his/her income.

31.5.33 Protecting and realising a redundancy payment
Where the employment has ended prior to the date of the bankruptcy order and the bankrupt is waiting for payment the money owed forms part of the estate and vest in the trustee in bankruptcy. The official receiver should obtain details of the payer (either a private employer or the Redundancy Payments Services) and arrange for the redundancy payment element to be made directly to the trustee in bankruptcy.

31.5.34 Redundancy payments – an after acquired asset
Where a bankrupt has received notice of redundancy but has not yet had his/her employment terminated at the date of the bankruptcy order the right to receive a redundancy payment has not yet arisen. The attention of the bankrupt should be drawn to the obligation of the bankrupt to notify the trustee in bankruptcy should he/she acquire any property, which includes redundancy payments URL="http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part5/part2/Part%202%20notes.htm#7"][COLOR=#0066cc]Note 7[/COLOR][/URL. The bankrupt should be asked to acknowledge his/her obligations in writing. Any such payment should be claimed by the trustee in bankruptcy within 42 days of becoming aware of the redundancy payment as after-acquired property URL="http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part5/part2/Part%202%20notes.htm#8"][COLOR=#0066cc]Note 8[/COLOR][/URL. The same applies to any redundancy payments paid between the date of the bankruptcy order and the date of discharge. Where the trustee in bankruptcy makes a claim for a redundancy payment as after-acquired property he/she should obtain details of the payer (either a private employer or the Redundancy Payments Services)and arrange for the redundancy payment element to be made directly to the trustee in bankruptcy.

I have seen many redundancy payments seized in full when paid out during the un discharged BR period.
However, you are discharged but with an existing IPA. Normally 'income' would be claimed by adjusting the IPA on a one off basis but the TM specifically states that it is property, NOT income.
Based upon that I would suggest that the money is yours to keep.

Bear in mind we are using England and Wales rules.

DD

Polly_Wolly_Doodle

Thank you both.
The only case law i can see from up here seemed to say the non-statutory part was available to the trustee, however it didn't specify the dates, so i don't know if it was after the first year or not.

Does anyone know the Scottish rules / guidelines?
I don't want to ask the trustee as they are a profit making company and when the AiB was uncertain i think it could all be at their discretion and obviously i can't afford a lawyer to argue.