Redundancy while making contributions to bankrupcy

UltraBlue

Hi, I'm currently in the position of possibly being made redundant from my job of just over 2 years and would receive a redundancy payment. I am 17 months into bankrupcy, I have been discharged but still making contribution payments. If I were to be made redundant would the payment I receive need to be passed over to the trustee?

Thanks
Robert

debt_doctor

Hi,


An interesting one;


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/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.


So my view is that the payment is property, which could have been claimed if you were undischarged, but not now.
If the trustee attempted to vary your IPA as a one off - then they would be counting it as income, which as above is not correct. You should resist this if it happens.


DD

UltraBlue

Thank you for the advice DD.
I'm hoping the redundancy won't happen but if it does I will let you know what happens, it might be usefull for someone in the same situation.

Colliz_2

I was made redundant this year and my employer was instructed to pay my redundancy payment directly to the OR. I didn't get another job for a month, and so had to make a claim against the redundancy fund to cover my expenses (rent, council tax etc.). However, this took 3 months to be agreed which caused me a bit of a problem

Chaz001

Colliz - were you undischarged when made redundant? As far as I have been told you can keep redundancy payment if you're discharged