Redundancy and your IVA

This page contains information about debt solutions available in England, Wales and Northern Ireland. Debt advice in Scotland involves similar but different solutions. Before considering an IVA as a debt solution, please make sure you fully understand the risks involved when entering an IVA.

Redundancy and IVAs

Redundancy is tough, but we can help you

The economy hasn’t been in great shape since 2007 and unfortunately redundancy continues to be common in some industries.

If you’re on an IVA and have been made redundant we still want to make sure your IVA is successful and you become debt free.

If you’ve received a redundancy payment then there could be some other options to consider, we’ll help you work out your options.

Help! I’ve been made redundant

First off, don’t panic. We’re here to help and guide you through the process of keeping your IVA going, even if your income has suddenly dried up.

With redundancy, the amounts you receive may vary there are number of possible scenarios; it might be that you receive a redundancy payment large enough to have some spare to pay towards debts or you might only receive enough to cover living costs (if that).

Let’s look at a couple of scenarios. Firstly, you’ve received a sizable payment.

A good pay-out…

So you’ve been made redundant but the pay-out is generous. How will this affect your IVA?

The first thing is that you’ll need to find a new job so you can start earning again. That’s why you’ll be allowed to keep six months’ wages to help you look for employment and keep your IVA going at the same time.

If you do find a job during the six month period any money left outstanding will need to be paid into your IVA for the benefit of your creditors.

If you receive a pay-out that allows you to put aside six months’ worth of expenses but you still have money left over, you’ll need to pay this money into your IVA.

If you haven’t found a job after six months and your expenses have run out, we’d need to propose a payment break. Your IVA will then be put on hold for up to six months until you find new employment.

A bad pay-off

So you’ve been made redundant and the pay-out is less than generous. How will this affect your IVA?

In this scenario we’d most likely suggest a payment break almost immediately. A payment break can be taken for up to six months at your IVA supervisor’s discretion or with approval of your creditors.

This will give you time to find new employment. If and when you do find work your IVA payments will resume again. Of course we may need to look at your income and expenditure budget should your new salary be smaller or (hopefully) larger than your previous wage.

Any time taken out of the IVA in a payment break will be added back into the IVA at the end. So if you do take a six month payment break, you would make up for this by making six further payments at the end of your IVA.

This means your arrangement will last longer than you originally anticipated; therefore it is important that you look to resume payments as soon as possible to avoid your arrangement lasting longer than it needs to.

Good news/bad news

If you do receive bad news like impending redundancy you should let your caseworker know about this as soon as you can. The good news is that we’re here to help here to help you make your IVA a success, even if there’s a few bumps in the road.

Things to consider

If you’re making fairly large changes to your IVA then your creditors may have to approve them and there’s a possibility these won’t be accepted. If your IVA fails then there’s a risk of being made bankrupt.

Whatever happens we’ll do everything we can to support you and guide you through your options.

Posted by in Living with debt