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dethbidonut
Starting Member
2 Posts |
 Posted - 19 July 2011 : 15:27:53
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Hi all, my wife and I have unfortunately recently been made bankrupt largely due to my wife being made redundant earlier in the year. We spent nearly all of her redundancy package servicing our debts but in the end we had to go the bankcruptcy route. Our OR has deemed that we will enter into an IPA of around £50 a month (which is our surplus) for the next 3 years or until our circumstances change (my job is currently at risk of redundancy).
I read that we must inform OR of change in our income so that IPA can be recalculated, which i guess is fair enough, but what is my wife's motivation for seeking a job, knowing that all her income will go to the IPA?? (I know that it is only right to pay back our debts, but there was some quite irresponsible lending by certain businesses involved!)
We have the relief that our struggles are over and we can rebuild our lives, but it doesnt really motivate anyone to go out and better their circumstances during the 3 years? I just wonder how anyone else has coped with it?
Finally if i was lose my job and be given a redundancy package, do i have to give this up to the OR, despite my income thus falling below the threshold of an IPA? |
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godfer
Starting Member
United Kingdom
40 Posts |
Posted - 19 July 2011 : 16:16:14
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dethbidonut,
It is indeed a paradox...and I both sympathise and empathise. There is indeed no incentive for your wife (whilst subject to an IPA) to find gainful employment. 'tis plainly ridiculous!
In respect of any payment received in respect of redundancy: I too am under threat of such and made specific enquiries, and the advice received from the Money Advice Service was thus (in summary, based on Case Law): That monies received, provided it remained 'money' i.e. is not converted into 'material assets' - a speedboat, car, expensive TV etc - cannot be 'claimed' by the OR on an IPA\IPO basis, as it's seen as compensation for job loss!
As and when I 'find' the actual document I will present it here later. Hope this helps and affords some relief...it did me, I thought the OR was gonna 'snaffle' any or all money I were to receive in redundancy payment if I were to lose my job! |
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godfer
Starting Member
United Kingdom
40 Posts |
Posted - 19 July 2011 : 16:37:20
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That advice offered, verbatim, in respect of my enquiry: What is the effect of receipt of a redundancy payment on an undischarged bankrupt?
Case law has established that a redundancy payment represents compensation for loss of a job (Hindle v Percival Boat Ltd [1969] & Wilson v National Coal Board [1981]). It does not constitute compensation for loss of earnings (regardless of whether it is received before or after the bankruptcy order). This means that a redundancy payment should not be treated as income and ought not to be the subject of an IPO or IPA.
If a client has the right to receive a redundancy payment at the date of the bankruptcy order it is personal to the bankrupt and does not vest in the official receiver. While the redundancy payment should not be treated as income it could be claimed by the official receiver as after aquired property if the money changes character. This could be the case if for example the client uses the money to buy a car. If the payment remains as money until the client is discharged from bankruptcy the official reciever cannot claim it.
The official receiver must make a claim for after aquired property within 42 days of becoming aware of the property. The official receiver must be satisfied that the amount they claimas after acquired property does not include any amout payable in respect of wages. Any amount payable in respect of wages should be considered for an IPA/IPO.
Clear as mud...until read at least twice!!! |
Edited by - godfer on 19 July 2011 18:42:39 |
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debtinfo
forum expert
2826 Posts |
Posted - 19 July 2011 : 18:46:31
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tis clear (well if you used to work as an examiner that is).
In a nut shell what it is saying is that the money would be claimed as an asset rather than an income, which probably doesent mean much to you but is important. An asset can only be claimed during the bankruptcy so if you are made redundant the day after discharge you would be allowed to keep it, whereas if it was an income then it could be claimed for 3 years if you were in an IPA (as that months income would be well in excess of that months outgoings)
As regards the paradox of the IPA, the OR simply does not get involved with the moral decision of if you work or if so how much or what job, they simply set one standard which s that they take any income in excess of what you need to live on, they have to have one rule and make it apply to all bankrupts regardless of their changing circumstances.
Although a better job or overtime or bonus's wont have a financial incentive for the bankrupt to take on, many bankrupts take the view that (providing for instance overtime wasnt going to leave them majorly stressed) such things might afford them better carreer prospects or relationships with managers and so some do try and improve their working position. If you care only about he cash (as some people with no immediate career prospects do)then it probably isnt worth taking on overtime but if you can improve your position think of the extra incentive when you come out of the other side of the IPA |
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Essie
Junior Member
United Kingdom
115 Posts |
Posted - 19 July 2011 : 21:36:14
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Keeping in mind Godfer's case law, what happens if someone is given a small compensatory payment (well under 1k) through an employment tribunal? Will this be taken? What happens if that person doesn't cash the cheque until they are discharged? (do cheques have a time limit?)
Finally got head out of sand in October 2010
BR March 2011
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debtinfo
forum expert
2826 Posts |
Posted - 19 July 2011 : 22:16:47
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first, the date that matters would be the date it is awarded, the technical term is the date the asset devolved upon you,
BUT
Employment tribunals are a totaly differnt class of asset, they are right of action, on some right of actions you are allowed to keep the money, on some you are not, it depends on the circumstances, in particular whether the harm is done to you personally or the harm is to your estate, for example if you are awarded restitution because of the mental anguish then this is personal if you were awarded lost pay then that may be a loss to your estate
have a look here Annex K for a table of which claims vert with the OR or not
http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part9/Chapter31-9.htm |
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Skippy
forum expert
United Kingdom
3290 Posts |
Posted - 19 July 2011 : 22:18:14
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As far as I know cheques have to be cashed within 6 months.
View my blog at http://skippy13.blogs.iva.co.uk/
Only when the last tree has died, the last river has been poisoned and the last fish has been caught will we realise that we cannot eat money.
Last IPA payment made on 28th June 2010 - it's over at last! |
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Essie
Junior Member
United Kingdom
115 Posts |
Posted - 19 July 2011 : 22:53:00
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I'm sorry to hijack the thread.
I was claiming for unfair dismissal, bullying and disability discrimination.
Thank you for the link. I'm still very confused as to what it means. It is too technical for me!
I'm going to move soon hopefully - would I get a bro or a huge telling off if i use the money towards moving costs?
I am not trying to be devious or defraud etc. I just need to move away from where I am and have no other way of paying for it except by using this settlement. To have to give it to the OR and then have to save a tiny amount each month out of my food budget will mean I'm stuck here forever. (sorry for the whinge!!)
Thanks
Finally got head out of sand in October 2010
BR March 2011
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Edited by - Essie on 20 July 2011 05:02:21 |
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debtinfo
forum expert
2826 Posts |
Posted - 19 July 2011 : 22:59:13
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| look at the map in the annek K, on the right hand side as it tells you which ones are the OR's and which are yours |
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Essie
Junior Member
United Kingdom
115 Posts |
Posted - 19 July 2011 : 23:07:42
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Doh. Sorry, forgot to say that there was also a head of claim which was for hurt feelings and stress caused following my past employers behaviour and discrimination.
As it's a settlement of a hybrid claim I'm so confused!!
Finally got head out of sand in October 2010
BR March 2011
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Essie
Junior Member
United Kingdom
115 Posts |
Posted - 19 July 2011 : 23:21:27
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That is a great flow chart :)
Section 31.9.178 applies. I don't know what to think as we settled early so there is no easy way of apportioning the money between hurt feelings and loss of earnings.
Finally got head out of sand in October 2010
BR March 2011
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dethbidonut
Starting Member
2 Posts |
Posted - 21 July 2011 : 12:06:20
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Thank you all for the comments and advice! It would seem then that my wife should wait until we are discharged before getting employment, however perhaps voluntary work in her career sector would be a good move too.
Is it possible to get early discharge from BR (ie. less than the standard 12 months)? Is there anything we can do during the BR period, or is it ar the discretion of the OR?
Thanks again. |
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Skippy
forum expert
United Kingdom
3290 Posts |
Posted - 21 July 2011 : 12:31:26
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ED is at the discretion of the OR and it's not something that you should ask them about. However, since the BR rules were tightened last year I haven't heard of anyone getting ED, and I know there was talk about doing away with ED.
View my blog at http://skippy13.blogs.iva.co.uk/
Only when the last tree has died, the last river has been poisoned and the last fish has been caught will we realise that we cannot eat money.
Last IPA payment made on 28th June 2010 - it's over at last! |
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Paradox of IPA?
