Protecting your finances if you get made redundant

Written by PayPlan on 14 March 2018

Large-scale redundancies, like the ones we saw when Carillion collapsed, are never far from the headlines, though there are plenty more we don’t hear about. Whether you’ve lost a job in the past, or it’s the first time, it’s only natural to worry about how you’ll pay the bills.

Redundancy is never pleasant, but remember there are steps you can take to avoid getting into severe financial difficulties.

Know your rights

Before doing anything else, make sure you know what you’re entitled to. If you’ve been with your employer for more than two years, you should be eligible for redundancy pay, unless the company is going into liquidation.

Always take advantage of any consultations with your employer, as they may be able to offer you a position elsewhere in the business, or at least ensure you have time off to look for other jobs. In cases where more than 20 people are being made redundant, a union representative may be able to bargain for a settlement on your behalf.

Find out what you can claim

You might think that your redundancy pay will keep you going until you find another job, but even a generous settlement will soon be eaten away by everyday expenses.

Apply for Jobseeker’s Allowance (JSA) because it will help plug a gap in your income and open up other benefits, like discounts on bus and rail fares. It also ensures you won’t miss out on National Insurance credits, which go towards your state pension. The Travel to Interview Scheme also provides financial help to help you get to job interviews.

Many people feel depressed following a redundancy, but don’t feel you have to suffer in silence. On top of JSA, you may be able to access Universal Credit for housing and general living costs. If you’re facing real difficulties, contact your local council, Citizens’ Advice Bureau, Jobcentre or a charity like Turn2us, who should be able to advise on hardship loans and grants and/or access to food banks.

Tackle your debts

Without a regular wage, previously-manageable debts can suddenly spiral. If you’re paying high-interest on a credit card, consider transferring the balance to a zero-interest option. Some products offer interest-free periods of more than two years, providing some much-needed breathing room when your finances are stretched.

Take a good look at other debts and regular outgoings too. Car finance can cripple your bank balance, so it might be cheaper to sell or transfer your lease either via a garage or online. It’s also worth speaking to your mobile phone provider about switching to a cheaper plan.

What about mortgage payment protection insurance (MPPI)?

Homeowners who took out mortgage payment protection insurance (MPPI) should be able to access around a year’s worth of payments to cover the cost of their mortgage. Never try to take a policy out when rumours of redundancy start though, as most insurers won’t pay out.

Serious debt can normally only be addressed with the help of a professional, so get in touch with one of advisers to discuss your options.

Filed under Living in Debt

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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