Benefits and bancruptcy

zimlily

Hi
Dh went BR in July 2007. The OR said he should be due for early discharge sometime this month. At end December dh was made redundant as the firm he worked for went into administration. As the company went into administration, we have put in a claim for notice pay and redundance pay with the DTI. It apparently takes about 6 weeks to receive any of this pay. We notified the OR of our new situation and they told us not to touch the reundancy pay/notice pay when we get it until we have checked with them. Can they take this money?
Also, are we able to claim council tax/housing benefit/ and JSA when bankrupt and until dh is able to get another job and will we need to inform OR if we are in receipt of these benefits. At his former job, dh had the nil tax code applied - could this be why they want us to let them know if/when we get a payment from DTI? Also, if they said we were up for early discharge and now want dh to let them know about the DTI claim which takes 6 odd weeks, could this mean they have changed their minds about discharging dh early?

Thanks you for your assistance and sorry for so many questions!

tigerfeet2006

Hi Zimlily,

From the IS website

With regard to redundancy payments, it should be noted that any periodic payments in respect of redundancy represent compensation for loss of a job, and a redundancy payment whether received before or after the making of the bankruptcy order should not be treated as income or be included in an IPA, as it is an asset of the bankruptcy estate and should be realized accordingly. See Chapter 31.5, Monetary assets, paragraphs 31.5.14 and 31.5.15 regarding redundancy payments.

http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part7/part2/part_2.htm

Yes you can claim benefits while BR but with a lump sum from redundancy you may not be able to until it reaches a certain level.

Just because they say you will be considered doesn't mean you will get. It all depends how busy the office is. If they have some time then they will work on ED's but tend to concentrate on BR's. If I were you I would just think 12 months and anything else is a bonus.

NekoZombie

It would be easy to read the info above and conclude that the OR has no right to take any of the redundancy payment. To clarify:

'With regard to redundancy payments, it should be noted that any periodic payments in respect of redundancy represent compensation for loss of a job, and a redundancy payment whether received before or after the making of the bankruptcy order should not be treated as income or be included in an IPA, as it is an asset of the bankruptcy estate and should be realized accordingly.'

This means that while it will not influence an IPA because it is not regular income, it remains part of the bankrupts estate, and as such some (maybe all) of it will be appropriated by the OR.

tigerfeet2006

Thanks Neko I missed that . My apologies to the OP.

NekoZombie

tigerfeet2006 wrote: »

Thanks Neko I missed that . My apologies to the OP.

Wasn't taking a pop at you , just thought that the actual quote from the manual wasn't very clear. Your additional comments don't state anything wrong, but I suspected if someone wasn't reading carefully they would misinterpret the last bit

tigerfeet2006

No I realise you weren't taking a pop at me Neko, don't worry.

I was just embarrased that I failed to make it clear to the OP and also that I had not read something right. I was grateful that you pointed it out.

zimlily

Thank you both. This afternoon, a letter came from the OR informing us that any redundancy monies are the property of the OR and that on receipt of it we should keep it safe and secure for them..! I guess they intend to take it all. Dh also claimed for payment in lieu of notice - I wonder if they will take that all also. Seems ironic that if we could keep redundancy pay and notice pay we could get by until dh gets another job but instead it seems we will ineed to hand it over - money earned by dh and instead rely on benefits to carry us over. We don't have an IPA as our disposable income is lower than 100 but if dh is lucky enough to get a new job with a higher salary which gives us disposable income over £100 does that mean we would need to pay that for 3 years and not just up to July 2008 which would be automatic discharge? Crazy thing is that in this area there are not many companies offering the work dh does so we might need to move counties but with no savings/no credit etc and redundancy/notice pay being claimed, he doesn't have much hope of getting a job in his line of work in this area. Anyway we are grateful to be released from the previous large sum of debt! Still it is difficult to know what to do in these circumstances.

tigerfeet2006

While you are on benefits an IPA cannot be enforced. If your DH gets a higher paid job before discharge then he could be subject to an IPA for 36 months. I know what I would be inclined to do!!

zimlily

Thanks tigerfeet2006 for the info. We got into our debt mess when dh was made redundant first time round five years ago just after he returned to work after 2 weeks paternity leave after dc1 was born. We tried to live off credit cars and then resorted to loans to consolidate and of course just got into a mess. For two years we lived off very little trying to pay creditors on reduced payment agreements negotiated with help of CAB before deciding on the bankcruptcy route. Automatic disharge would be 5 months away...This time round we have 3 children and need to ensure a happy secure future with them so want this 2nd redundancy to affect us as little as possible and not take 2 steps back as such.

Best wishes
Zimlily

tigerfeet2006

This time round you have MSE as a resource to help you through with minimal problems. If you find that you have a drop in income being on benefits then have a look at some of the other boards like Old Style and DFW.

zimlily

Just out of interest, if dh did manage to secure a better paid job within the next 5 months left before his automatic discharge due 1 July 2008, and if the OR enforced an IPA, would this IPA run for three years from start of new job just say or does the 3 years IPA start from start of bankcruptcy - in dh's case July 2007? Also, after automatic discharge in July 2008 if he managed to get a much higher paid job would he still need to let OR know or would he be totally and completely free of all that?
Thanks again!