Welcome to the forum Rick66.

I'm very interested to hear what Kevin and/or David have to say about this situation when they next visit the forum.

To my mind, this seems like a scenario where a trustee is likely to apply some judgment rather than there being a clear black and white answer to your question.

The others might be able to provide a bit more clarity for you though.

Hi Rick66

The Trustee cannot claim on the statutory element as such, however if you started work immediately then the payment and the income from the new employment would require to be looked at and if excessive ( in the Trustee's opinion ) then a contribution would be sought, higher than the normal contribution as both 'incomes' would need to be assessed against household income.

Sorry I meant to say that pensions can be viewed in a similar way. Excluded, however if a lump sum is taken then this needs to be assessed as income.

Mark

Hi and thanks for your quick response.
Yes, that is what I have been thinking may be the case.
I would like to use my redundancy money to settle the trust deed early regardless of whether I find alternative employment or not. It will just cover the balance with very little extra.
I would obviously love to find alternative employment as soon as possible and I am reasonably confident of doing so, but I am worried that this could actually be detrimental. My thinking is that if I go straight from one job to another it could be seen that I can't actually justify keeping the statutory redundancy money and as a result I can't therefore settle the PTD early.
It seems crazy that someone might not want to find employment as soon as possible but being able to finalise my PTD sooner seems like a more attractive option to me at this point.

Hi Rick66,

How much do you estimate your statutory redundancy payment to be?

How much do you calculate is outstanding in terms of your monthly payments?

How much were your debts when you entered into the Trust Deed?

Hi David,
My statutory redundancy payment will be £7200 approx.

My official termination of employment will be in April. The redundancy money will be paid to me at that time and there will be approximately £4000 still outstanding to my trustee when that time arrives.

My debts totalled approximately £90,000

Thanks

Hi Rick66,

Thanks for supplying further information.

If like Mark has said you receive your statutory redundancy and start a job soon after, the Trustee would need to look at both incomes and decide on a contribution for that period of time.

I can't see the Trustee accepting your statutory redundancy package if you are volunteering this in full and final settlement of your Trust Deed.

From the Trustees view point, if you started work soon after, they could increase your payments (potentially doubling) for the remaining 11 months and increase the return to creditors.

It's one for your own Trustee to decide. Best to speak with them.

Let us know how you get on.

For all Trust Deeds signed after November 2013 it is impossible to settle them early without paying off the full amount of the debts and costs. Whilst yours would be from just before this cut-off, I wouldn't be surprised if your Trustee preferred the Trust Deed to run its full course rather than go against the new rules even though they don't technically apply to you.

I may be wrong, but don't want you to get your hopes up!

Hi Kevin and thanks for your reply. It has raised another couple of questions for me.
Firstly, is it entirely at the discretion of the trustee to accept or refuse an early settlement offer, despite signing prior to the Nov 2013 change you mentioned, or is there anything which obliges him to consider or even accept settlement?
Secondly, is the trustee able to seize ALL of my statutory redundancy payment if I find continued employment at a similar pay level?
Many thanks in advance.

Hi Rick66.

No obligation - they'll consider what's in the best interests of the creditors and take it from there.

I think if you're effectively benefitting from two incomes you might expect to pay a fair bit more into your trust deed. The calculation would usually be based on affordability (income minus reasonable expenditure). This is based upon the premise you agreed at the start of your trust deed; that you'll pay what you can reasonably afford into the arrangement.

For definite answers you're going to need to run this by your own trustee though.

Hi again, I now have an update.
I contacted my IP's helpline and was advised to make an offer for full and final settlement via email. The advice given was to offer more than the outstanding total from my statutory redundancy payment.
I will receive my redundancy payment of £7362.50 on 8th April and at that time I will have 9 payments left totalling £3240. I offered half of my redundancy pay (£3600) and received a response which I have pasted below. As I will be unemployed I understood the statutory redundancy payment was untouchable (If I am employed elsewhere by then it will be a different story). The IP is saying otherwise as you will see below. Please advise if they are correct in their response...

RESPONSE
The full sum received of £7362.50 would have to be paid into your Trust Deed as it is seen as an asset.

We can then go to the creditors with an offer of full and final settlement, you would have to confirm in writing how much you would like to offer.

You will have £3240 outstanding once the next two payments have been met however all full and final offers are at the discretion of your insolvency practitioner and the creditors.

If your offer is accepted they will be paid & any leftover redundancy money will be refunded back to you.

If your offer is rejected you will be given the opportunity to offer a higher amount but again all full and final offers are at the discretion of your insolvency practitioner and the creditors and may still be rejected meaning no refund will be made and you will have to continue with your monthly payments up to the end of your Trust Deed.

Hi Rick66.

Obviously that response appears to differ from some of what has been written by our experts previously in the thread.

You may wish to clarify with them that is will be a statutory redundancy payment and ask whether they will want to amend their response in light of that.

The position of redundancy payments in sequestration was considered in a Sheriff Court case back in 1990 (Trust Deeds should normally be dealt with in the same way).
In that case, the Sheriff held that the statutory redundancy payment should be classed as income, NOT an asset, and therefore does not vest in the Trustee.

This decision formed the basis of the Accountant in Bankruptcy's Notes for Guidance to Trustees. However, this also stated that as statutory redundancy pay is classed as income then it is open to Trustees to seek an increased contribution as a result of the payment.

I think most good-practice firms would bear in mind the individual's circumstances and whether the funds are needed to cover living costs whilst out of work. If that person did find another job again very quickly then there is a fair chance that a Trustee may then seek to gather in the "excess" redundancy money by increasing the contribution temporarily.

However, to say that statutory redundancy pay is an asset that would automatically have to be paid is, I believe, contrary to both case law and the AIB's formal guidance.

Hi Rick66,

Under the notes for guidance issued by the Accountant in Bankruptcy, section 6.24 Redundancy Payment and other Compensation Payments confirms the position with a redundancy payment and what vests in the Trustee.

There is a specific court case - Patrick McGrail whereby the Sheriff clarified what the Trustee was entitled to engather and what they weren't. You are entitled to your statutory element and any enhanced payment the Trustee can take.

I would go back to your Trustee and refer them to this, explain a breakdown of your redundancy and that it is statutory and ask them if this will change their response. They may ask for a breakdown of your redundancy offer letter.

If you want to find this section please see the AIB website and looks for the notes for guidance section.

Just over 1 minute apart in our responses Kevin! Always have a wee smile when that happens with the posts on the forum on the same subject.

Glad we came to the same conclusion over it. Hopefully Rick66 gets the same advice when he brings it up to his Trustee.