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This is the place to ask questions if you are already in an Individual Voluntary Arrangement
By hamstrung
#28787
Hi

I am currently 2yrs into an IVA and owe a total of 4k with a further 5k planned to be paid via equity release, so a total of 9k outstanding. I am to be made redundant in 8wks time and will receive 13k in payment. Will I be forced to give up the entire sum in order to close the agreement early? Our debt management people have given conflicting responses..one chap said no we wont, yet another has said we most probably will??

I'm now very confused, and could do with some advice?
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By Geraldine
#28793
Hello hamstrung and welcome to the forum.

Normally you would be able to settle an IVA in full with a redundancy payment if you are not likely to get another job any time soon and so further monthly payments into your IVA are not possible.

In terms of whether you will be able to keep back any of the money to help with your on going living expenses the answer to this is yes. Generally you would be able to keep enough to cover your living expenses for the next 2-3 months.

I am surprised that your IVA company has given confusing messages on this. Who are you with?
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By James Falla
#28809
Hello hamstrung

If you are made redundant while in an IVA the bottom line is that any redundancy payment you receive is treated as a windfall. As such in theory it should all be simply paid into your IVA as an extra payment. However in practice this will only really happen if you already have another job lined up and the redundancy will not really affect your income at all and you will be able to continue making your monthly IVA payments as normal.

Of course this situation is generally unusual. More usually you may struggle to find another job in the short to medium term. As such it should be possible to agree a full and final settlement of your IVA using the redundancy money you receive. Once this is done your IVA is completed and you would have no further obligation to your creditors and no further obligation to release equity from your house.

Of course you may need some of your redundancy money to live off until you get another job. So how much of your redundancy money will you have to give up? Geraldine is right, the generally accepted norm is that you would be allowed to keep the equivalent of 3 months of your net income. The remainder of the money would be used for the lump sum settlement. Of course all of this is dependent on your specific circumstances but this is how things normally play out.
By hamstrung
#28810
Thanks for your replies.

I will be expecting a tax free redundancy sum of £13,800. We currently have 4k left to pay, and we were hoping to offer £9k as a final settlement. This would remove the need for equity release in 3 years time. As this would leave me with £4.8k, and 3 months net pay would actually be £5.4k were kind of hoping that this will be looked upon favourably? Are we being naive?

We hope that our specific circumstances will also help mitigate the closure. I currently enjoy fixed hours with my current employer which allows my other half to work evenings from PM. As i will no longer have the fixed hours in any new role, we fear that my redundancy will also now force her out of her job, and with it the loss of hear earnings until such time as she can find another role somewhere that fits around whatever hours I myself eventually find. It’s all a bit “If’s and buts” presently which isn’t helping our quest to get some concrete planning in place.

The last thing I want to do is jeopardise in anyway the IVA agreement, and would see settlement as priority number one but given the complexity of situation and having 4 kids, I would also like to retain some money and settle the agreement. Again, am I being naive?
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By Hayden
#28816
Hi hamstrung

From what you have said I do not think you are being naïve. Given what you have said about your situation the offer of £9000 sounds very reasonable and your IP should be happy to put this to your creditors.