Bankcrupt and Redundant

stavros_uk

Hello to all,

I'm looking for some advise regarding the following and hope someone can help.

I declared myself bankrupt in March 2013 and was discharged in March 2014. I do however have a IPA in place for the three years which is due to end in July 2017. As my income has gone up and down I have fully complied with Clarke Willmott and the official receiver and payments have been adjusted accordingly. They are currently at £0 and have been since January 2017.

I was made redundant at the end of April 2017, and informed them my income was now zero. I'm not claiming JSA or any other benefits so my current income is zero.

I'm really worried they will take my redundancy pay which I need to live off until I find work, But I plan to retrain in another trade first.

I provided evidence in a from of a letter from my ex employer stated I was made redundant in April. They are know wanting more and more proof.

Will they take my redudancy? Truth is most of it has gone on ensuring any debts are paid .
Part of my thinks I should have not told them with my IPA ending in July of this year.

Also can a IPA be extednted?

thank you for any advise

Regards

GazHatesBanks

A redundancy payment is treated as an asset. As this was acquired after your discharge it is safe from the OR (it would have been different if you had been made redundant before your discharge).

An IPA cannot be extended so once your last payment is made (even if that is nil) that's it.

By the way, surely your IPA should have been completed by now? If you were dischared in March 14, the latest an IPA should have started was March 14, so ending in Feb 17 (36 months)

stavros_uk

The IPA didn't start till the 3rd July 2014. Hence that's when it ends.

Good to hear they can't take my redundancy money.

They are know asking for proof of redundancy money and pay in lieu of plus holidays. Surely my P45 should have been enough.

To make it worse I've been off sick with a
Mental illness since December. Trying to do the right things makes it worse.

National_Debtline

Hi Stavros_uk,


I am slightly confused by some of your dates. According to your messages, you were bankrupt in March 2013, discharged in March 2014 and your IPA began in July 2014 - this is not possible. According to the technical manual you cannot enter into an IPA after you have been discharged.


"31.7.9 Agreement must be signed by the bankrupt and the official receiver to bring it into force before the bankrupt is discharged
An IPA can only be entered into prior to the discharge of the bankrupt URL="https://www.insolvencydirect.bis.gov.uk/technicalmanual/ch25-36/Chapter31/part7/part1/part1notes.htm#6"]Note 6[/URL and only comes into force when the official receiver or trustee signs it URL="https://www.insolvencydirect.bis.gov.uk/technicalmanual/ch25-36/Chapter31/part7/part1/part1notes.htm#7"]Note 7[/URL. This means that in order to ensure the IPA is valid, the agreement must be signed prior to discharge by the trustee or official receiver. The bankrupt can be allowed up to 14 days (or longer, if specified by the official receiver) to consider a draft IPA, sign and return the agreement URL="https://www.insolvencydirect.bis.gov.uk/technicalmanual/ch25-36/Chapter31/part7/part1/part1notes.htm#8"]note 8[/URL. The policy of the Service is to allow a 14 day "cooling off" period after the bankrupt has signed the agreement. This is not a requirement of the legislation and it must be remembered that for the agreement to come into force it must be signed by the official receiver prior to the bankrupt receiving his/her discharge(see also Part 5 paragraphs 31.7.133 to 31.7.137). The official receiver should not delay signing the agreement where the bankrupt’s discharge will occur before the 14 days expires. Ideally the agreement should be signed at the earliest opportunity, in order to validate the IPA URL="https://www.insolvencydirect.bis.gov.uk/technicalmanual/ch25-36/Chapter31/part7/part1/part1notes.htm#9"]note 9[/URL. It is especially important to allow enough time for the IPA to be validated where an application is to be made for early discharge (see paragraph 31.7.172)."


You can complain to the OR about this issue and ask them to clarify how this has happened. It is a very complicated issue and quite rare so you may need to speak to the Insolvency Service directly (0300 678 0015) about what you can do if the IPA has been executed incorrectly.


However, I should also make you aware that if the IPA did start before you were discharged (or can be considered valid) then withholding of information about the redundancy could be a problem. Can you please clarify when you signed your IPA for future posters.


Laura
@natdebtline

stavros_uk

Hi Nat

Yes I have my years wrong.

Bankrupt March 2014. Discharged March 2015. IPA until July 2017

Regards

National_Debtline

Hello again Stavros_uk,


I just wanted to add that if your redundancy contained any elements of 'back pay' then it may complicate matters and that may be why they want more information from you. You will need to comply with the information requested and consider further advice if you are concerned (either from the Insolvency Service or legally).


However, I also wanted to confirm what GazHatesBanks said, that the redundancy money cannot be taken as an asset after discharge and cannot be taken as income under an IPA (as long as the redundancy does not consist of any back pay).




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 /COLOR][/FONT][URL="https://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch25-36/Chapter31/part5/part2/Part%202%20notes.htm#6"][FONT="Times New Roman"][COLOR=black]Note 6[/COLOR][/FONT][/URL][COLOR=red][FONT="Times New Roman"][COLOR=black. 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 [prior to discharge]. The official receiver should resist any attempt by the bankrupt to argue that a redundancy payment is part of his/her income. [/COLOR]


Laura
@natdebtline

stavros_uk

Hi Laura

Thanks Again for your advice. What if work paid my via a settlement figure rather than me taking them to court for unfair dismissal and was paid out under 30,000 which is the tax free maximum. Therefore did not receive pay in lieu or holiday pay. Are the insolvency team allowed to take this?

Regards

Guest101

stavros_uk wrote: »

Hi Laura

Thanks Again for your advice. What if work paid my via a settlement figure rather than me taking them to court for unfair dismissal and was paid out under 30,000 which is the tax free maximum. Therefore did not receive pay in lieu or holiday pay. Are the insolvency team allowed to take this?

Regards

That's not redundancy though?

National_Debtline

Hi Stavros_uk,

I think you are going to need to call one of the free debt advice charities to discuss this further. It sounds as though you left through a compromise agreement as opposed to receiving redundancy, which means the rules are not the same. I am afraid it is quite a specific question and will likely need to be looked into very carefully, to give you a conclusive answer.

However, based on the fact that you were subject to an IPA and you received a lump sum, I believe they could have taken some/all of this towards your debts through a variation in the IPA. The technical manual doesn't cover this idea exactly, however, it does state the following: -

31.7.174 Likely circumstances requiring application to court to vary an IPA or IPO
The most likely circumstances where it will be necessary to apply to the court for the IPA/IPO to be varied are:
ii. Where the bankrupt who is subject to an IPA/IPO is in receipt of a lump sum payment such as a pension lump sum (either before or after discharge) which can be held to be within the definition of income and can be recovered under an IPA/IPO see paragraph 31.7.52 and Annexes B and C.

31.7.175 IPA/IPO variation to deal with receipt of a pension/ lump sum
The bankrupt's monthly income may change as a result of receiving his/her pension (as opposed to remaining in employment) and the official receiver/trustee should consider this when seeking to vary the amount to be claimed under the IPA/ IPO. To ensure that creditors receive the full anticipated amount under the original agreement or order it may be necessary to adjust the bankrupt's payments , which could include making a one-off payment from the lump sum to cover the amount still outstanding within the term of the original IPA/IPO and then vary to nil the amount of contribution for the months remaining within the original term of the IPA/IPO. Whilst the payment terms under the IPA/IPO may be varied, it is not possible for any varied payments to extend beyond the three year term of the original agreement or order.
If a bonus is paid to the (former) bankrupt whilst an IPA is in force, the IPA may be varied to claim the bonus, including where the bonus became due before but is received after discharge.
For further guidance on claiming pension or lump sum income see Part 2 of this chapter, in particular paragraph31.7.52. Also see Annex B and Annex C attached to this chapter, which include example calculations on the assessment of real disposable income in circumstances where the official receiver seeks to claim a lump sum payment via an IPA/IPO.

Sorry to quote so much of the technical manual but it is a situation that requires context. As I mentioned, I think you should contact one of the free debt agencies directly to get some individual advice about this situation. I really hope you can get this sorted,

Laura
@natdebtline