Bankruptcy and Redundancy payments

Bella_Smythe

Hi Guys. I have been lurking here and asking occasional questions for a while now, but this is our year of change I think . We have currently stopped paying the mortgage to save up for bankruptcy fees, also could barely afford it as it £562 monthly out of approx £1500, I have had to reduce my hours and therefore salary drastically due to illness, and my husband is a student (no trolls, please, we've paid tax and NI for about 70 years between us!)
Okay. I may (its not definate) be offered voluntary redundancy in the next month or so. Guess the lump sum would be around £25000. Now if i took this would I be expected to pay lump sums off my debts (I'm currently making minimum payments through a DMP with Payplan) or would it be acceptable to use it to live on for the year or so until my husband finishes uni? after alll it is a year's salary or thereabouts, just all at once? or would that been seen as bad conduct and incur a BRO/BRU or whatever they are called?
Also - embarrassed to ask this one - if I spent some of the lump sum redundancy payout or cosmetic surgery would THAT incur a BRO? I'm no vain hollywood artificial doll type person but my sagging jowls and eyelids make me look miserable and older than I am and I get depressed about it. I do have clinical depression been on meds for years, although that is not the reason I can't work much anymore - I carried on working through terrible depression and PTSD although I did have a few periods off sick.
wow. sorry Ive gone on so much. please some proper hard answers from the clever people, not opinions on my lifestyle!!!:eek::eek::eek:
Thank you Bella

Flyright

Spending money on cosmetic surgery rather than apportioning the funds to your debts would very likely be reason for a potentially lengthy BRO.

Bella_Smythe

hmmm i thought that might be the case . what about using it to live on for a year while my husband finishes uni?

TheGardener

I am not one of the experts but from what I have seen on the boards - redundancy payments are classed as part of a BR estate and may be taken to pay your creditors so you need to think very carefully about this one and take some professional advice from StepChange or one of the other debt charities.
the official IS website has this info:
31.5.14 Redundancy payments.

A bankrupt may argue that as he/she no longer has a job, any redundancy payment he/she receives will be his/her income. Case law has established that a redundancy payment represents compensation for loss of a job: Hindle v Percival Boat Limited [1969] 1 WLR 174, and Wilson v National Coal Board [1981] SLT 67. Although the amount of the payment is related to length of service and to the level of past salary, it does not constitute compensation for loss of earnings. A redundancy payment will be made to an employee dismissed by reason of redundancy, even if that employee immediately secures another job, and even if that job is at higher wages.

31.5.15 Protecting and realising a redundancy payment

A redundancy payment whether received before or after the making of the bankruptcy order should not therefore be treated as income and the possible subject of an income payments agreement or income payments order but as an asset and realised accordingly.
If the bankrupt has not received the redundancy payment at the date of the bankruptcy order, the official receiver should remind the bankrupt that he/she has an obligation under the provisions of section 333 to give the trustee notice should he/she acquire any property and that this includes the receipt of any redundancy payment. This reminder should be confirmed in writing. Where possible, the official receiver should obtain details of the payer, if it is a private employer or the Redundancy Payments Directorate if payment is to be made under the Employment Rights Act 1996, and arrange that the redundancy payment be made directly to the trustee.

I suspect the surgery would be a complete no-no and as far as living off your VR, maybe you would be better carrying on working for now until you get sorted? As I say - you need to get some advice first.

Bella_Smythe

yes. I almost certainly would be better carrying on working, but this is becoming increasingly hard because of my health. thank you for the information. So if we sort of lived on it at like £1000 a month or so and then declared bankrupcy once it was gone would that be seen as acting against what im supposed to do? its getting very, very hard to work, and I won't be able to for much longer (getting near at least early retirement age, and have a couple of things I can do from home for part-time earnings). If i get the chance it would be a godsend to be able to give up work, but I don't want to jeopardise anything.

McKneff

Could your husband not suspend his studies and get a job till things get better for you.

debt_doctor

Hi,


If you have stopped paying the mortgage, what are your plans for re housing?
Securing your future housing comes first, before any bankruptcy.


DD

Bella_Smythe

thanks to the posters who answered my questions. yes we have plans about rehousing and also my husbands present circumstances and future career, but I didn't ask for any advice on those.

Bella_Smythe

bump? so is it definate that If I take the MARS (redundancy) and spent it, even if I did that on living for like a year, that would be seen as bad conduct and I would get a BRO? what exactly is a BRO anyway? hoping one of the knowledgeable people can answer me (with big thanks already to The Gardener for the links to the stuff on redundancy payments being capital or income)
Bella