Welcome to the forum fjp.

The information given doesn't make much sense to me.

A regular trust deed payment will be calculated from a reliable level of income. That wouldn't include non-guaranteed bonuses, commission or overtime.

As far as I know a trustee still has some discretion about how non-guaranteed additional income is treated.

Please check back here as I'm sure David, Kevin and Mark will add to this topic about how each of their firms might look at this.

I think it would be difficult if not impossible to use the CFT on this basis as you would firstly be predicting future income and secondly saying to creditors that you were going to actively discourage people from earning additional income in the future by demanding £100. That way the person does not work overtime as there's no point, so the creditors will get nothing.

The sensible approach is work the CFT on the basic amount and agree a formula for anything over & above this. That way everyone benefits.

Mark

Hi fjp,

Like Mark said it's very difficult to work like this as it's predicting future income and the incentive for the person to work extra to achieve a bonus wouldn't be there if they knew they would lose it.

I've looked over the Common Financial Tool Guidance and can't find anything within it that confirms a Trustee will take 100% of someone's bonus. I was convinced this was the case last night but wanted to check this morning when I got into the office.

It's about striking a balance between the creditors and the client in this scenario. This should be agreed up front with a Trustee and documented in writing so the client knows what proportion of their bonus they will need to pay over.

Our firm take a balanced approach when it comes to bonuses and overtime etc. It's an important question you want to ask a firm when you asking for advice.

If you want to, you can provide us with a little more information regarding your circumstances and we can give you some general advice about all of your options.

I have been looking into this issue and I am afraid that it seems that merely applying good sense when it comes to overtime/bonuses may not necessarily be compliant any longer with the legislation and the Accountant in Bankruptcy's formal Guidance.

After all, this isn't simply about predicting someone's future income by use of a crystal ball, it is about being required to use the evidence of someone's past income to work out how much they are required to contribute going forward. If that past income shows regular overtime/bonuses then it will have to be taken into account and the legislation states that the whole of a debtor's surplus income must be sought by the Trustee.

The guidance even suggests that it may be fairest for a trustee to average a debtor's income over the last 12 months, rather than the usual 3 months, when working out their surplus income figure in cases where overtime may have been worked recently - the implication being that to simply base the income figure on the recent period would distort the true average income figure. There is no mention of a trustee having any discretion to allow a debtor to retain a proportion of bonuses/overtime or to treat it differently to the basic salary.

So whilst I certainly share the other experts' views that trustees should be able to incentivise people to take on overtime or strive to earn bonuses by allowing them to keep a proportion, what fjp has been told does actually seem to be correct by the letter of the law - something confirmed by more than one senior staff member at the AIB that I have spoken with.

Without wishing to put words in the mouth of the AIB staff, they recognise that this position could well be counter-productive to both debtor and creditor interests. I am hopeful therefore that we will get some formal clarification soon from the AIB soon to say that this was not their intention so that common sense can prevail.

Thanks for sharing that Kevin.

It is interesting how good ideas and progress can lead to unforeseen detrimental consequences.