PayPlan’s Debt and Redundancy Guide

If you’re in debt and worried about redundancy, or have been made redundant, then don’t panic. Our Guide to Debt and Redundancy talks you through what to do if you are in debt and are being made redundant.

What do I do if I face redundancy?

If you are struggling to pay your bills right now, speaking to an expert is a great first step. When you contact PayPlan, one of our helpful advisors will look at the money you have coming in and the money you need to spend.

We will help you prioritise your most important bills. Based on what you have left over each month, we will talk you through the best options for you. If you’re spending more than you have incoming, and have no money left over, we might suggest offering a token payment of £1 a month to the non-priority debts you owe, such as personal loans, credit cards and store cards. This shows them you want to pay but need some time. Our advisors will tell you the best way forward.

What happens if I fall behind on my payments?

It is very important to pay your priority debts first. These include rent, mortgages, gas, electricity and council tax. Falling behind on these bills carries much more severe consequences than other debts and must be prioritised.

What are my redundancy rights?

You should always check your own employment contract to see your exact rights. However, there are basic rules that employers usually follow.

The consultation period

Before making redundancies, your employer should have a consultation with you. This involves explaining why you were selected and giving you a chance to ask questions. You can also discuss other jobs that may be available at the company.

How are people chosen for redundancy?

Your employer might consider your skills, experience, and competence. Under the Equality Act 2010, they’re not allowed to choose you based on your:

• Age
• Gender
• Race
• Religion
• Disability
• Trade Union Membership

How much notice will I get?

• If you have been employed for one month to two years, you must get at least one week of notice
• If you have been employed for two to 12 years, you get one week of notice for every year you worked.
• If you have been employed for 12 years or more, you get 12 weeks of notice

Will I get redundancy pay?

You should qualify for statutory redundancy pay if you have worked for your employer for at least two full years in a row. The amount of money depends on factors like your age and how many years you worked there. Redundancy pay up to £30,000 is tax-free. Your employer must give you a written statement showing how they worked out your payment and confirming the date your job ends.

How can I find new employment opportunities?

Losing your job gives you a chance for a fresh start and a chance to re-evaluate your skills. Many of the skills you learned in your old job are easily transferable to a new one.

• Get your CV ready: Think about your successes at work and use your relevant skills to update your CV.
• Connect with people: Let your old colleagues and friends know you are available for work and looking for a new opportunity. Keep online profiles like LinkedIn up to date.
• Look for training: Make use of the government job search website or talk to your local Jobcentre Plus.

Five simple steps to get your finances on track

1. Review your money: Write down everything you need to pay for. Separate your payments to focus on priority debts first.
2. Boost your income: Check if you can claim any benefits by using our benefits checker. Go through your bills to see if you can cancel anything you no longer need.
3. Clear your arrears: If you are falling behind with repayments, speak to our expert advisors. We can talk you through your available options
4. Plan ahead: Once you are working again, try to get into the habit of saving. It is recommended to build up a buffer of three times your normal monthly wage.
5. Ask for expert support: Look at our recommended organisations and partners who can help below.

Frequently Asked Questions

Q: What happens if my circumstances change in the future? A: If your situation changes due to unforeseen circumstances, we can review your plan to see whether an alternative might be better for you. A Debt Management Plan, for example, allows you to change payments if your income changes.

Q: I do not have any income right now. What options do I have? A: If you have a negative budget, meaning you have more money going out than coming in, we recommend trying to make a token payment of £1 per month. This acts as a gesture of goodwill to show your creditors you are still willing to make an offer.

Q: What happens if my employer does not pay me? A: If your employer has been declared insolvent and cannot pay your redundancy, you may be able to claim from the appointed insolvency practitioner. If that is not possible, you can apply for a direct payment from the National Insurance Fund.

Where can I get extra support after redundancy?

• ACAS: Can help with all employment rights issues by calling 0300 123 1100.
• Citizens Advice: Offers free and impartial advice online or at a local office.
• Gov.uk: Provides general online advice about redundancy and notice periods.
• Samaritans: Are there to support you 24 hours a day, 365 days a year. Call 116 123.
• Pensions Advisory Service: Offer free and impartial guidance to people with pensions on 0800 011 3797.

Take the next step with PayPlan

If you’re faced with redundancy, struggling with repayments, or have fallen into arrears, get free, confidential advice online or call 0800 316 1833 to speak to one of our experts. We’re here to help you understand your options and find a practical solution.

Download our PDF Debt and Redundancy Guide