I could be made redundant soon. By then I will have paid 34 months into my IVA. Payments are £324 a month over 60 months. The actual debt was £33k.
If I am made redundant the payout will be small, about £5.5k due to me being with my employer for only a relatively short period of time.
According to my IVA I would be allowed to keep 6 months pay out of my redundancy payment to live on and the remainder should be paid into my IVA. However £5.5k is nowhere near 6 months pay and so I am assuming I will be able to keep the entire payout.
I was wondering if instead of me keeping it, my creditors would take the £5.5k as a full and final payment. Would this be likely or is the amount too small?
At this stage, the payments still to be paid would total £8424.
It is possible that your creditors would accept that offer, but how would you manage to live until you found another job? I think you would be better keeping the redundancy money, continuing with your IVA payments whilst you can afford them and concentrate on finding a new job. If this doe not happen, then you could arrange a payment break to give you more time.
It is certainly worth suggesting. However, do be aware that benefits will be made or withheld on the premise that you have the £5.5k in your bank account (DWP don't look kindly on divesting yourself of the lump sum compensation in settlement of debts), so you need to ensure that you will be able to continue making essential payments while you seek work.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I was thinking that I might be able to get by on benefits until I got a new job. I am in a rented accommodation and so I thought I'd be able to claim housing benefit as well as JSA.
I realise I'd be scraping by but was thinking at least I'd have the debt off my mind.
And, I just assumed that I would be able to settle my debts - ie, I would explain to DWP that I was made redundant but had had to pay my debts out of that money. But I suppose on reflection, why would they care if I owed anyone any money or went bankrupt.
I am not sure you will be entitled to claim those benefits Janice, if you have had a lump sum payment by way of redundancy. Best to check with the DWP first before you come up with any firm plans.
Think about yourself first. If you hand over all your redundancy you could struggle over the next few months so perhaps let the situation settle down before you make a decision.
I know from our experience, that you would be entitled to 6 months worth of JSA which is contribution based and is soley based on your NI contributions, they will not ask about your redundancy money at that stage, after that it reverts to means tested, when this happened to hubby, we were not asked where his redundancy money had gone at all, all they were worried about was how much I earned, when we got the letter with his award, my wages us over the threshold and hubby has not had any JSA since Aug 2009 when his contribution ones ended.
Edited to add, we did not leave his redundancy money in the bank but drew it out and put it in a safe, so on his bank statements it didn't show maybe that was why we were not asked about it. As long as your bank statements do not show £100's they do not seem to ask
Last edited by Pandy on Mon Dec 23, 2013 2:11 pm, edited 1 time in total.
If life is what you make it, I must have been in a strange mood when I made mine
That is helpful to know Peejayal, and perhaps does give more confidence to the option of offering the money in full and final settlement, but personally I would still err with caution.
That level of redundancy / saving will be of no interest to DWP as under the limit for allowable savings. JSA contribution based for the first six months does not take into account savings. After six months any savings should be declared but unless over the limit won't impact on benefit entitlement. Look at www.gov.uk and there are links on there to look at entitlements to benefit and to make claims on-line automatically for JSA.
Sharing from experiences of dealing with debt
There is a solution for everyone .... Just need to stay positive !
I will look into benefit entitlements carefully just in case.
I still am wondering if my creditors would be likely to accept to an offer of this size (£5.5k) under the circumstances or whether it would be touch and go, or even unlikely - if anyone has any idea?
I think it would be touch and go but worth exploring with your IP. In today's employment market, if I were a creditor, I would probably accept ( bird in the hand and all that ). We have seen in the past that creditors can be very unpredictable, so this would all be pure guesswork, however, if your IP is on your side and willing to recommend acceptance that would be a great help.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
