# Should I take voluntary redundancy to clear huge debt?



## shouldi (2 Aug 2010)

Hi All

I'm hoping I can get some advice if possible

At the moment i'm drowning in debt & the company I work for is offering voluntary redundancy.

I owe 

20000 to to the bank (pay 501 a month)

4000 to the credit union (pay 200 a month)

300 to a HP company (pay 50 euro a month)

8000 on a credit card (Pay 200 a month)

2000 euro to family (pay nothing at moment)

550 rent (paid monthly)

I earn 1800 a month and really cannot survive ive already missed a few payments and i am worried about my credit rating.


If I was to be accepted for VR i would get around 40000 euro , i'm thinking i should take it and clean the slate , I could try and get a new job as soon as possible but would not have to worry about taking a pay decrease etc because my outgoings would be minimal.

My mind is saying I would be mad not to go for it but a lot of me is thinking about the uncertainty around getting another job..

any advice would be appreciated.. I know I would be left with not much to play around with but im thinking a clean slate would give me more satisfaction than my current job.

Many thanks for reading


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## goingforgold (2 Aug 2010)

It depends on how easy it would be to get another job. But certainly it looks like a good option if you were able to get another job in or around the same pay, especially if there were career prospects in that job.

I know a lot of people who have done very well out of Voluntary redundancy in the last couple of years as it suited them to take it. Looks like you would get your life back by doing so.


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## shouldi (2 Aug 2010)

Thank you for your reply going for gold

I think your right it would certainly help to get my life back or at least not have to worry about making ends meet!

I really don't have alot to play around with at the moment and its really getting to me.

I have worked in the industry i'm in for over 10 years and would happily take a lower paid position as I would still have more cash to play around with the only thing is worrying about getting a job but i'm thinking i would rather worry about getting a job and not owing anything over worrying about private number calls and banks taking me to court!

im useless with money but i think this could be my wake up call

Thanks again


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## goingforgold (2 Aug 2010)

Do you have a mortgage...if so that might be a factor to bear in mind when making your decision


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## shouldi (2 Aug 2010)

No I don't have a mortgage or any children.. I was also worrying about if I wanted to get a mortgage but as it is i think it would be 5 years before i clear down those debts as there is nothing spare to add additionally etc a mortgage wont be coming my way anytime soon .. i'm 29 also BTW thanks for your reply


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## goingforgold (2 Aug 2010)

you wouldn't get a mortgage as things stand as you have quite a large debt and no savings. If you clear the debts and start saving a bit then you would be a candidate for a mortgage.Best of luck. Good to have options!


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## Welfarite (2 Aug 2010)

My advice is take the VR and pay of your debts in full. You are already stryggling to make repayments (you say you've missed some) and are paying 1000 p m in repayments (what's last one of 550 per month refer to?), without the 2000 to fanily being cleared, leaving you 800 p m to live on. Jobseeker's Benefit would be 196 per week but bear in mind that there may be a disqualifying period of up to 9 weeks for taking voluntary redundancy which you will have to finance for.


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## shouldi (2 Aug 2010)

Hi Welfarite the 550 is my rent so i'm left with 300 euro a month to live on which is hard 

Many thanks for your advice I think the VR might be the way to go and a clean slate would be great 


I think i would have about 4000 left after paying everything which would hopefully get me through

I need to discuss with my job also to make sure im entitled I can push for it if i really want it

Thanks for your reply


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## ontour (2 Aug 2010)

Update your CV and get it out to agencies or other employers to help you to determine how easy it would be to get another job.  
It is also a good opportunity to think about using some of the redundancy for further education or training that may help your future earnings, if that interests you.


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## goingforgold (2 Aug 2010)

You won't be disqualified from job seekers for any period as you're redundancy is under 50K


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## PaddyW (3 Aug 2010)

Definitely clear the slate I reckon. You pay 550 a month for rent? Is that a place of your own or are you sharing? If sharing that's costly. I pay 260 a month for a room in Swords.


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## PyritePete (3 Aug 2010)

can I just ask - you say you are entitled to 40k redundancy - is this before or after tax ? My understanding is that on your 1st redundancy you can get 30k tax free with the rest subject to tax...


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## Nige (3 Aug 2010)

PyritePete said:


> can I just ask - you say you are entitled to 40k redundancy - is this before or after tax ? My understanding is that on your 1st redundancy you can get 30k tax free with the rest subject to tax...


 
I think you are confusing the UK system with the Irish system.

In Ireland, the statutory element of a redundancy payment is tax free. After that, the ex-gratia element (of any termination payment) is taxable except for:

the basic exemption (which is €10,160 + 765 for every FULL year of service with that employer) or 
the increased exemption (which is the basic exemption + €10k - the current value of any tax free lump sum from the pension from that job) or
the amount calculated by the SCSB.

The increased exemption can only be claimed every 10 years.


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## Welfarite (3 Aug 2010)

goingforgold said:


> You won't be disqualified from job seekers for any period as you're redundancy is under 50K


 I wasn't referring to the redundancy element; I was pointing out that there MAY be a question about leaving the job voluntarily without 'just cause' which could result in a disqualification. This from the website:

"A person may be disqualified for receiving JB for up to 9 weeks from date of leaving employment if s/he has left the employment voluntarily and without just cause."

Trying to cover all the bases!


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## Nugbug (3 Aug 2010)

shouldi said:


> Hi All
> 
> I'm hoping I can get some advice if possible
> 
> ...


 
Take the money if you can get it otherwise you will be paying for this for the rest of your life in interest and if you miss payments it will blacken your record.  Considering the way banks are going through everything forensically these days if you have any bad debts it would make it next to impossible to get credit.

Not that it's any of my business but how does a single person with no children and no mortgage get into so much debt, I'm baffled?


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## pinkyBear (3 Aug 2010)

Hi there,
I was about to ask the same question as nugbug, how did you get into such debt in the first place. Is there anything else you can do to bring down the debt? Do you have a fancy car that can be sold?? I would also suggest posting on Money Makeover. I have seen cases whereby volutary redundancy was refused to people, because they were key to an organisation.

P..


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## shouldi (3 Aug 2010)

Hi All 

Thank you for your responses 

believe me I know ive been extremely stupid with money & half the debt was stupidly racked up by me taking a loan out for an ex.I'm not going to whine at the end of the day but to cut a long story short hes gone and im left with it! 

Its extremely embarressing for me unfortunately my lease is not up until November so I will look at options of moving then to try reduce the debt.

I think if I pushed I could get the redunancy wipe the slate clean and move on, by the looks of things were I work there are 4 people doing a 3 people job so I would have a chance.

Many thanks for your replies


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## PyritePete (3 Aug 2010)

Nige said:


> I think you are confusing the UK system with the Irish system.
> 
> In Ireland, the statutory element of a redundancy payment is tax free. After that, the ex-gratia element (of any termination payment) is taxable except for:
> 
> ...


 
I was made redundant in Ireland in 2007. My redundancy included payment in lieu of notice which is non-taxable. Maybe that's why 30k sticks in my head...Money long since spent. 

Enough about me  good luck to the OP. Clearing debts would always be a priority for me.


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## Sidetracker (3 Aug 2010)

As I understand it, leaving your job voluntarily is not quite the same thing as accepting voluntary redunuancy which is being offered by your employer. You will also qualify for a tax rebate after a number of months.


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## Complainer (4 Aug 2010)

The key issue is - will you get another job? How long will it take? What salary will you get?

It would be very easy to find yourself falling into debt again on the dole. How confident are you of getting another job? How many people do you know in your sector who have changed jobs in the last 6 months.


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## Nige (4 Aug 2010)

PyritePete said:


> My redundancy included payment in lieu of notice which is non-taxable.


 
payment in lieu of notice is taxable. If your former employer didn't tax it, they did it wrong!


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## Blueeyes123 (10 Aug 2010)

Hi Shouldi,

I had almost the same debts ( between myself and my husband) I was made compulsory reduntant in July, it was the best thing ever, I got the money and transferred most of it off all our debts, it was a fantastic feeling.. debt free, I did this with in 1 day....human nature is a funny thing, I felt the longer it was left in my bank the more ideas I would have about how I could spend it.. like a long haul holiday or something LOL.

So I strongly recommend you take it, the cost of falling behind in your loans is too high - i.e. late fees and stuff companies love people to mess up and they add crazy penalties.

One more thing, when I cleared my €6000 credit card bill I requesed mbna to reduce my limit to €1000 which they did straight away, this is to prevent myself from getting into to trouble again, I would have cancelled the card except in a recession, I would hardly get a new card - being unemployed that is.

Best of luck with what you decide. 

Blueeyes.


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## JoeB (10 Aug 2010)

I would definitely take the VR.

You take home 1,800 per month you said... this is only 21,600 per year, so your redundancy is nearly two years wages.

If you factor in 9,000 or so Social Welfare per year, then you're down less, and if you get another job you'll be laughing. How much interest do you pay per year?.. you'll save this too...

The one disadvantage is that you may not get more work in your industry, but you should be able to get a job paying 400 to 500 per week eventually..


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## Chocks away (10 Aug 2010)

As an outsider looking in, this is a no brainer to me. Take the VR. Pay off your debts. Wise up. Have a short holiday and start anew. You'll have learned a great lesson and by using your 'get out of jail card', you won't want to get in that state again. I hope it goes well for you.


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## shouldi (11 Aug 2010)

*Thank you*

Hey All 

Thanks so much for all your replies they have been really helpful

I am going to speak to my manager and ask her to push for VR for me ( I may not fall into scope but she said she would push if anybody really wants it)

With all your advice and the way i feel i'm drowning in debt it really is the best solution for me, my credit rating has already been affected and I would love to clean the slate and start afresh.

Blueeyes123 - I can imagine the relief you felt! 

The money i'm on isnt a huge salary and well below what I should be on for my role... I dont think I would have a huge issue getting another position in my industry but TBH I wouldnt mind a change and would work anywhere! 

Thanks agin I will keep you all posted! the only thing I need to find out now is the amount & how much is taxable and would it clear my bills and leave me with a small amount.

Thanks again


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## shouldi (11 Aug 2010)

Chocks away said:


> As an outsider looking in, this is a no brainer to me. Take the VR. Pay off your debts. Wise up. Have a short holiday and start anew. You'll have learned a great lesson and by using your 'get out of jail card', you won't want to get in that state again. I hope it goes well for you.



Thanks Chocks Away , you can say that again! I think I can safely say I will Never rack up a personal debt like that again! I cant wait to have freedom from my bills (Fingers Crossed)


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## PaddyW (11 Aug 2010)

Good luck shouldi. Please remember to let us know how you get on with it. Would be nice to know!


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## niceoneted (11 Aug 2010)

Best of luck.It's the right decision if you get the VR.


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## Complainer (11 Aug 2010)

shouldi said:


> but TBH I wouldnt mind a change and would work anywhere!


So would many of the 450,000 people looking for a job.

You really need to have a good idea of where the next job will come from. If you are talking to your manager about VR, start talking to the recruitment agencies about your next job to get a feel for your options.


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## pixiebean22 (11 Aug 2010)

Agree with the above poster.  Have a look on all the recruitment websites and it might be an idea to send your cv to any other places in your sector (like if you work in legal send your cv to other law firms via the dx), even if you get rejected by all of them you're guaranteed 2 or 3 will keep your cv on file and consider you for any upcoming roles.  

Obviously VR is your best option and even if you end up on the dole for a little while you'll still be a lot better off than you are now but you need to consider the longer you are out of a job the harder it is to be motivated to get a new one.  You could look into going back to education, moving abroad etc as well, in fairness this could do you so many favours


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## shouldi (22 Aug 2010)

Hi All

Thanks again for all your replies

I'm going to speak to my manager tomorrow and fingers crossed I will be able to go for the VR. 

I have had a long think and its the best way for me to go with my current circumstances. 

I have looked at jobs in my sector and there is more than i expected for the role I do.. I am also looking at returning to education short term to upskill.

Thanks again for all your advice and hopefully I will be on with good news in the next week or so! 

Hope all is well with everyone


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## niceoneted (22 Aug 2010)

Good luck with the meeting and keep us posted on what happens please.


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## Yoltan (27 Aug 2010)

I'm in the minority here but I'd definitely reconsider taking VR. All well and good to be debt free but you need to get a job and survive afterwards. I was offered VR a year back and also have some debt (not as high as yours but still finding it very difficult). I weighed everything up and came to the conclusion that even if I cleared it I would still need to find money for my mortgage, food, heating etc. Yes there are jobs out there to be had but in the industry I'm in, I'm seeing people getting 6 month contracts with quite low wages. I wish you the very best of luck if it works out for you but for me, I've a few years left to grin and bear it!


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## JoeB (27 Aug 2010)

I don't think the OP has a mortgage.. this is the crucial difference. He is on relatively low wages, and would have many opportunities if he could clear his debt.. he could go travelling for example.


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## JoeB (27 Aug 2010)

Complainer said:


> So would many of the 450,000 people looking for a job.



Is this true? Would many of the unemployed architects and solicitors work in Tescos or McDonalds, or in a service station for example?

Many people have large mortgages etc and would likely say that they cannot afford to take a poor paying job.


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## Yoltan (27 Aug 2010)

JoeBallantin said:


> he could clear his debt.. he could go travelling for example.


 
Another fine way of getting into more debt. 

I know she doesn't have a mortgage but do you not think a permanent job is extremely important these days? It's awful to be in debt and fair play to her for facing it head on but if you REALLY cut back you can get through it. Very difficult but can be done.


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## DiGiTaL (4 Sep 2010)

If I was in your position and got offered that sum in redundancy I would consider it a gift from heaven. There is nothing like the feeling of being debt free. In relation to getting another job my attitude is that if you really put a lot of effort in and chase up every opportunity you will find a job. You may not want to be too fussy in the type of job though. It will be a massive weight off your shoulders. No brainer IMHO.


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## shouldi (18 Sep 2010)

*Rejected for VR *

Hello Everyone 

Just to give you all an update I applied for the VR but was rejected 

I had a feeling this would happen but i'm still disappointed as it would have sorted me out big time..

So onwards and downwards (debtwise!) I've decided to work on the present and see what I can do to take away some of my bills 

I am going to move in with family and use the money I was spending on rent to take a chunk off my higher interest debts hopefully in 12 months I will be in a much better place and in the meantime am going to focus on things I can change rather than getting upset at what I could have done with the money..

The place I work always offers VR every few years so will hang on and maybe I get it the next time.

Thanks again for all your advice everyone I really appreciate it


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