Debt and redundancy: here’s what to do

Being made redundant, or fearing that you might be, can be a stressful time. You’re certainly not alone – 240,000 people were made redundant in the first six months of the year. And with close to half a million redundancies likely to be announced this autumn, many more people are concerned about what will happen to their jobs when the furlough scheme ends.

With that in mind, if you have been made redundant, you’re concerned you might be, or even if your job feels relatively safe right now, it’s important to know your rights and what it is you’re entitled to. And if you’re already dealing with debts, you might be worried about how redundancy will affect your ability to cope – but don’t panic.

Redundancy can be a big change in your life, but it’s not the end of the world. And the more you know about how being laid off works, and how to deal with your debts, the better you’ll be prepared to handle it. Here’s our round-up of where to find all the information you’ll need.

Your rights

Your rights relating to redundancy can be complicated. To check that your employer has followed the right process to make you redundant, including giving you the notice period and redundancy pay you’re entitled to:

• check your employment contract if you have one, as it may differ from the statutory guidelines
• read the articles under ‘Redundancy’ on the Citizens Advice, Money Advice Service or gov.uk websites
• speak to your trade union. If you’re not a member of a trade union, consider joining one: you can find the right union for you on the TUC website.

If you’re currently furloughed, here are a couple of things to remember:

• If you’re entitled to redundancy pay, it should be based on your usual full wage, not your furlough wage if that’s lower.
• Your employer still has a responsibility to hold the same redundancy consultation period with you and your colleagues that they would have done if you were all at work.

If you don’t think your employer is carrying out redundancies fairly, speak to your trade union or call the Advisory, Conciliation & Arbitration Service.

 

What to do about your debts if you’re made redundant

Even if you’ve been managing to pay all your debts, redundancy is often a sudden change in circumstances that can lead to problem debt. And because it may lead to a period of financial uncertainty, for example while you’re looking for a new job, it’s sometimes hard to begin sorting out your debts.

The first thing to do is to find out whether you can get any financial support while you’re out of work – we have a free, independent benefit checker you can use.

Next, get some expert debt advice. When you speak to a debt adviser, like the ones we have at Financial Wellness Group, they will help you look at the money you have coming in and going out, to help you find a suitable way to deal with your debts.

If, at that point, it’s clear that you’re unable to afford repayments on your debts, and that your financial situation is subject to change, then one option might be to use our free ‘breathing space’ service.

How does breathing space work?

Once we have completed an assessment of your situation, we may recommend that a suitable, temporary option is to ask your creditors for some breathing space. If you decide you want to go ahead with a breathing space application, then with your permission we will:

• contact all your creditors. (We’ll run a quick credit check to make sure we have a complete, up-to-date list.) We will ask them to give you a payment break for up to 3 months, to give you time to get your financial situation to stabilise.
• ask your creditors to freeze interest and any further charges. We’ll ask them not to take any enforcement action against you for the period of the breathing space too.

There is no charge for using our breathing space service. Your credit rating may be affected as a result of this service.

Do my lenders have to give me breathing space from my debts?

Breathing space is an informal arrangement. So we can’t guarantee that your lenders will agree to our requests, but most major lenders we’ve contacted have said that they will.

What happens at the end of the three months?

One of our advisers will contact you again towards the end of the three-month breathing space period.

Hopefully, by then you’ll have your finances under control – you’ll be in a position to start making repayments again.

But if you’re still in financial difficulty at that point, we’ll help you find a long-term debt solution to help you get your finances back on track. Although we won’t charge for any initial debt advice we provide, there may be charges associated with the debt solution you select, and entering into a debt solution may affect your credit rating.

If your finances change before the end of the three months, just let us know and we can help you with your next steps.

How do I get help with my debts?

To speak to one of our team, give us a call on 0161 413 9569. They’ll ask you some questions about your financial situation to understand if breathing space might help you, or whether a debt solution might be suitable.

Where to get further help and information

• ACAS can help with all employment rights issues: call 0845 747 4747
• If you are a member of a trade union, then speak to your workplace rep, shop steward or contact your union directly.

Looking for a new job

Try to stay positive – redundancy is often a valuable opportunity for a fresh start. But we understand that finding a new job can be a daunting prospect. Here’s a checklist of where to look for job opportunities and career advice.

Job listings

• You can find thousands of jobs on the government’s website at gov.uk/find-a-job. Your local council’s website may also have job listings for your area. Some councils are even conducting virtual careers fairs.
• Check the websites of local and national newspapers.
• You can find a list of recruitment agencies on the Recruitment & Employment Confederation – this includes agencies that can help you look for work matching your particular sector or skill set.
• If you graduated from university within the last few years, get in touch with their careers service.

Skills for your search

• If you’re new to jobhunting online, learnmyway.com can help you find your way around. And if it’s time to refresh your CV, you can find an online CV builder on the National Careers Service website. You can build a bilingual CV on Careers Wales.
• Job interviews can be stressful at the best of times, and social distancing adds extra challenges. If you’ve never taken part in an interview by phone or video before, it’s a good idea to be prepared. For advice, check out Prospects.

If you need mental health support

The Mental Health Foundation website has lots of useful information about how to take care of your mental health and where to get help if and when you need it.