Bankrupt & Redundancy

Nemo1987

I become bankrupt and have since been discharged, but due to my salery I have still be contributing IPA payments to the receiver each month.

While I'm still making these payments I know I need to declare all changes in my work and salery.

My work has now confirmed that I am going to be made redundant. They are issuing my redundancy and have given me my final figure payment which I know I must declare.

My work have asked me to stay beyond my statutory redundancy notice, and have offered me an enhancement bonus if I stay working for them for four weeks longer, which will then be on top of my redundancy pay.

Do I need to declare the bonus enhancement aswell to the receiver? Or just my basic redundancy?

luvchocolate

I would think you have to report it all, it would then be up to them if your are allowed to keep anything.

debt_doctor

Hi,


You should declare it all, but the redundancy payment is your to keep - it is an asset not income, and you have been discharged so assets are yours.
You will likely lose the bonus as an additional one off IPA unless you can demonstrate that you need some of it for your reasonable domestic needs.


From the Technical Manual.......

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="https://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.


DD

debt_doctor

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="https://www.insolvencydirect.bis.gov.uk/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="https://www.insolvencydirect.bis.gov.uk/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.


31.8.3 After-acquired property – general
In general terms, after-acquired property may be described as property acquired by, or devolving upon, a bankrupt after the making of the bankruptcy order and before he/she is discharged from the proceedings. The Act puts a duty on the bankrupt to provide the trustee with details of such acquisitions (see paragraph 31.8.4) and, in turn, gives the trustee power to claim the property where it is appropriate to do so (see paragraph 31.8.14).