Hello prenticebaby.

They are, it's very similar to a trust deed really.

They should be assessed exactly like trust deeds. There seems to be a thinking that you somehow do not need to contribute in sequestrations, however the basis for contributions is dealt with the same way. In some cases though, if a Trustee is taking on a sequestration they need to ensure that there are sufficient funds available as they will be liable for the ongoing costs and outlays for the 3 year period.

Mark

Mark

Hi prenticebaby,

As a provider of Insolvency services to the Accountant in Bankruptcy we deal with a large volume of sequestrations per year and I would have to agreed with Mark in that people often believe that they don't have to pay as they have been declared bankrupt and the debt written off.

It's our job where appropriate and possible to request that a payment is paid the same as in a Trust Deed. A lot of the time we come up against people that simply refuse to pay because they have been told by someone they know that they don't have to pay.

The payment should be fair and affordable based on current budget guidelines. It's a good idea for your friend to speak with an advisor/Insolvency Practitioner before considering Sequestration so they have an idea of what they could be asked to pay per week/month.

Thanks guys, very helpful as usual. I understood that the debtor could stipulate an affordable payment rather than income & expenditure being considered and reviewed.

I am currently a discharged bankrupt, although I am still paying monthly payments to trustee, I have another 15 months to go, I have to complete an income and expediture update every 6 months, so from what I can see there is very little difference between trust deeds & sequestration.

Hi prenticebaby.

That isn't the case.

Some people appoint their own trustee for bankruptcy, something you can do if you have some surplus income or assets that can be disposed of to at least cover the fees. In this case it would be possible to agree a contribution in advance, albeit it will be based on affordability. You could also discuss and plan how any assets will be dealt with.

Other people apply directly to the AIB. In this case you'd normally be assigned to a trustee afterwards who will then assess your income and expenditure before informing you what your contribution will be (assuming a contribution is affordable). They would also determine whether any assets need to be dealt with and how.

Therefore, where possible, appointing your own trustee might give you a much better sense in advance as to how everything will work out.

An income and expenditure should always be completed when agreeing a contribution in a bankruptcy. This should be documented in the bankruptcy questionnaire as later on down the line should an (IPO) Income Payment Order be sought from a Sheriff they will require evidence of the income and expenditure at the time the agreement was reached. This can also benefit an individual as when they are required to lodge answers prior to the hearing they can provide the Sheriff with details of any changes in their income and expenditure and why they cannot continue with the original (IPA) Income Payment Agreement.

as TDA has said, appointing your own Trustee can help as things will be agreed prior to entering into bankruptcy that way you know what you will pay each month and how any assets will be dealt with. It's almost like getting everything in writing before you enter into a Trust Deed that way there should be no surprises along the way.

I think the confusion comes from people misinterpreting the fact that there is no minimum dividend in Bankruptcy. That doesn't mean no payment though.
The Income and expenditure we completed was the same one used I believe for trust deeds and the same measure of permitted or reasonable living costs is applied.

Definitely get this checked early on though with your chosen firm, and agreed to avoid difficulty later.

We hadnt fully completed an I/E early enough to realise we could not afford sufficient contributions to appoint an IP but had already had the application submitted.
Fortunately we have had help from family in terms of committing to the fees for the admin throughout the duration of our case. Otherwise we would have had to take a few backward steps and apply to AIB and after well over a year wrangling with the bleakness of having to look at bankruptcy, we know we will be finalising the 3 year period before anything starts to get better and even then will be worrying about repaying family when there is no longer a contribution to be paid.
Because of reduced overtime and increased mandatory pension contributions, income has dropped for my husband and cashflow is very tight.
I am soooo thankful my contributions can continue regardless of our I/E but also finding it difficult to be building up a debt with pensioners.
All in, mixed blessings, eventually we were glad to be able to opt for sequestration but also looking forward to an end to payments being made on our behalf.