Hi David

I think there are interesting times ahead. Looking at the new regulations, it appears that even if the Trust Deed proposal is accepted by TIX who deal with income and expenditure statements from thousands of Trust Deeds and tens of thousands of IVA's, the AIB will have the final say if they think the income and expenditure is acceptable or not!

Mark

It really is Mark. It needs everyone to be on the same page or as close to that as possible. If we send a proposal to TIX as they require a joint income and expenditure and they accept this then the AIB will not protect it. If we don't send a joint I&E to TIX they won't accept it and we can't get it protected due to the objection. On the other hand if TIX don't object but the AIB feel it's not an acceptable I&E then they will not protect it...

Some of the feedback and responses to the new regulations that I read were regarding who should be an approved advisor and who should be giving advice. If it should be Insolvency Practitioners and their staff or the money advisers via the local authority, CAB or voluntary organisation. The point was also made that the only staff member at the AIB with the necessary Insolvency qualification had moved on within the Scottish Executive. It raises the question that who at the AIB will be qualified as a money advisor or have the necessary hands on experience to decide if a budget fits or not. You can work off of set guidelines and figures but you also need the experience of dealing with budgeting, income and expenditures etc.

It should really come down to the creditors who decide if a Trust Deed proposal is acceptable or not after all it's their money. In the past creditors didn't have the likes of TIX or IVA Watch so were a little in the dark but now they do and a lot more creditors do know about Trust Deed's and the proposals that are made to them so are able to understand things.

I was speaking with a financial advisor and he was comparing the changes to our industry to the ones that they faced years ago. It can only be a good think that the rules and regulations change for the better but in addition there has to be an understanding and balance.

Time will tell...

It appears that this matter has now been resolved with the AiB backing down on their previous position.

Hi Voice of Reason

Can I ask where you got the information?

I think this is where ther problem lies. The AIB issue an instruction to Trustees adjusting a previously agreed format, but fail to tell the biggest creditor representative group or associated groups. The problem is highlighted, discussions take place and the position changes, but we are all none the wiser!

Mark

It was a strange change by the AIB as the new regs, which I assume have been discussed for many many months tell us the use the Common Financial Statement as used by the Money Advice Trust which shows joint income and joint which kinda contradicts the AIB's guidance to show all Trust Deeds on an individual basis. Confused?> We will be!

Mark

Regarding the previous post, it appears that matter has not been overturned, however the position has been clarified.

The AIB were/are concerned by some Trustee's income and expenditure statements whereby one party is by far the higher earner than the other, yet the split of contributions towards the expenditure is disproportionate to the income. This effectively leaves a position where the main earner is subsidising the contributions of the other.

As an example A earns £1300p/m and B earns £300. After deducting the normal household expenses there is £500 left. The both of them pay a contribution of £250.

Fortunately we don't have this issue as our calculation work on a percentage split, however I can see their point if trust deeds are being submitted on this basis.

Mark

They are now willing to protect cases where the household income and expenditure is provided. That very much seems to be a reversal.

Everything else appears as if it is an attempt to justify themselves. I would be very surprised if firms don't follow the same process with regard to the split in contributions in the same way as yourself Mark.

The AIB have issued further directive on this to clarify their initial position on this matter. I've copied and pasted this below for people who may be interested to read.

It surrounds some firms putting people onto Trust Deed's who may be in receipt of state benefits. It makes for interesting reading on how some firms may be operating.

This letter can also be found on the AIB website.

Protected Trust Deeds (PTDs)

Statement of debtor's affairs in PTDs

The purpose of this letter is to provide some further clarification in relation to the Dear Trustee letter issued on 8 August 2013 (Point 1) and in relation to the presentation of a debtor's statement of affairs.

The previous letter highlighted that a number of cases had been encountered in which the trustee had prepared and presented a debtor's statement of affairs based on the joint assets, liabilities, income and expenditure of the debtor and their partner.

In view of representations that have been made since the issue of this letter, it is considered appropriate to provide a further explanation of the particular circumstances that have arisen and that instigated the circulation of the initial Dear Trustee letter.

A number of trust deeds have recently been presented for protection where each member of a couple has granted an individual trust deed on the basis that a contribution can be made from available income. However, the income and expenditure has been presented on a joint basis in each case. Only on further scrutiny has it become apparent that one of the individual's sole income is derived from state benefits, while the other partner has a more significant income from salary. The contribution in the benefits only trust deed is only possible through an allocation of funds from the employed partner.

This situation gives rise to two outcomes which are not acceptable:

i. An unfair preference is created which is prejudicial to the creditors of the employed individual. It is clear that in this scenario the employed person would be required to make a higher level of contribution during the period of the trust deed rather than allocating funds towards a contribution for their partner.

ii. The partner with benefits only income is introduced to a contributions based insolvency product that is inappropriate for their circumstances.

The intention of the previous Dear Trustee letter was to prevent this scenario occurring and to ensure that the trust deed was only granted for a single estate and based on a debtor's income and expenditure ÔÇô this is consistent with Regulation 8 (c) of the Protected Trust Deeds (Scotland) Regulations 2008, as amended (The Regulations).

There was no intention, however, to prevent creditors from being presented with a full picture of household income and expenditure where this is necessary. The Accountant recognises that these situations can be particularly complex and that in certain circumstances, the rationale for assessing an individual's income and expenditure can be illustrated most appropriately in the context of the overall household situation.

Notwithstanding the above, it is clear within the Regulations and the Notes for Guidance that creditors must be provided with an explicit assessment of each debtor's income and expenditure and the resultant contribution, even where the overall household position has been considered. The Accountant will require this evidence to be provided when considering registration of protected status.