Hi Buz.

An average makes sense, though putting some thought to future projections for business also make sense in addition. If the actual figures varied substantially some kind of adjustment is likely.

In terms of splitting expenditure it's usually the case that you'd proportion shared household expenses proportionately to income. So, if you earned the same, things like rent/mortgage, council tax etc might be split in half.

Your partner would not have not contribute towards your debts, just pay a fair share of the joint household costs. Her surplus cash is hers to spend as she wishes.

Thanks TDA, it was the surplus in her income that my partner was concerned with, as she is happy to contribute her share to household accordingly, and your answer is appreciated. Her salary would work out higher than my net income so her proportion may be higher due to that, we would have to see how the numbers crunched.

Thanks again.

Hi Buz

This is something that was clarified by the Accountant in Bankruptcy quite recently actually. Trust deeds and bankruptcies should only be based on that individual's income, not anyone else's. The only change from your partner moving in would be that you would benefit from sharing some bills so you'd be likely to be a little better off and may have to pay a slightly higher contribution as a result.

Thanks Kevin,

I did read the guidance notes on the site but was a bit confused as to how it would work in practice re the proportionate split of incomes when deciding the contribution to household bills. The notes seem to suggest there is a link to her income and my own i.e. if we earn the same then household bills are split 50/50 or 30/70 if she earns more etc etc. From what you say is this not the case? She does earn more than me but has her own personal commitments to pay but will more than likely be able and willing to go halves, which as you say will release potentially more for me to contribute to TD anyway. I am worried about moving forward generally, and as you can appreciate she is also concerned at how this may/will affect her income and earnings ongoing also, if she does move in. Juggling my money is enough stress without juggling my lovelife too lol !!

Thanks for your help.

Hi Kevin,

Though I would add this to clarify where I am getting confused !!

Here is the site's guidance notes re Expenditure in relation to couples where it seems to refer to "household income" ? :

How does this work for couples?
When calculating a trust deed payment, even for just one person, all household income and expenditure will be recorded. This produces a figure for the total surplus income in that household after all essential expenditure is covered.

The surplus income for the household will then be divided between the two partners. Most commonly this will involve a division of the surplus based upon the relative earnings of each individual.

For example, if both partners earn the same amount they would each be deemed entitled to 50% of the surplus. If both persons were to sign trust deeds they would each use this amount (50% of the total surplus) to pay into their trust deed each month. If only one partner was signing a trust deed they might pay their 50% to the trust deed, with the other partner retaining their 50% share to spend as they wish.

If one partner earned twice as much as the other the situation would be different. That person would be deemed entitled to two thirds (67%) of the surplus household income which might become their trust deed payment. The other partner could spend their third (33%) as they wish (including funding a trust deed where appropriate).

This system ensures that each partner effectively pays their fair share of the household expenditure, which then allows them access to their fair share of the household surplus income

Kevin's right that the AIB recently issued new guidance Buz. The page you're quoting from pre-dates that.

How will a trustee interpret a fair share of the bills with the new guidance in mind? Similarly I'd have thought, though I'm interested to hear what our experts have to say about that in terms of their own firms view...

Hi TDA

Its a good point and another example of guidance which will be open to interpretation!

Personally, my thinking is that you look at the combined income and calculate the expenditure as a percentage of income. ie if your income is 65% of the total household income, then you will be liable for 65% of the expenditure. Not sure how benefits etc fit into the thinking though!.

Mark

But wouldn't that, indirectly at least, take into account the income of a partner or spouse?!

What's odd about this is that it seems like an eminently fair way to go about things, for debtors, their partners and their creditors.

Is it possible that the AIB have found cases where a trust deed was based upon someone else's income? For example, a husband that isn't working having their trust deed being paid by a wife that does?

What happens where someone that genuinely wants (or needs) to avoid bankruptcy needs a relative to help fund a viable trust deed payment? It's very occasional, but we've seen the odd case like that over the years. Would this no longer be allowable?

I wonder if the problem that they are trying to fix is where trustees have sought an unfairly high contribution as a result of directly taking into account a partner's income.

Presumably, if someone wants to set up a trust deed based on a third party paying in then they will still be able to do that - as long as the trustee is presenting it to creditors on that basis, but only showing the debtor's income/expenditure on the statement of affairs.

Regarding the split of household expenses - we would normally split joint bills on a pro-rata basis according to earnings too, similar to Mark's answer above. However, having said that I do feel that there it may sometimes be justifiable to split the joint bills 50-50. If I was a partner of someone entering a trust deed and was earning more than them I would probably feel a bit aggrieved that I am being told that I have to use up my hard-earned income to pay a higher share of joint bills than my partner.

Thanks for the comments very interesting. However, with AIB "guidance" suggesting "Trust deeds and bankruptcies should only be based on that individual's income, not anyone else's", (as you have advised Kevin), I am therefore surprised/concerned that the concensus from the advisers is that they would take a combined income into account for expenditure calculation!! I appreciate there are interpretations of the (wooly?) guidance but it would appear pretty straightforward - it is based upon the sole applicants income and expenditure (of which an amount is contributed to by the partner, irrespective of the partners income levels?)

In reality of course most partners would contribute, but surely at a fair rate that they wish to do so, and not which is prescribed or expected by the arrangement? I appreciate each case is different but surely the "guidance" should be (fairly) applied ?

I am coming to this from no knowledge of the workings of TDs so I do not mean to be seen to be argumentative or to open a can of worms !!

It does raise questions with regards to partners with significantly lower or indeed higher earnings than the TD applicant, but for my own situation my partner is happy to go dutch on the household expenditure but has concerns at a pro-rata requirement.

many thanks for the input I am glad to have the assistance,
Regards.

I guess the issue is how you calculate what is "fair" Buz.

You, your partner and your creditors might take different views on that.

The trustee therefore needs to come to a balanced judgment. 50:50 would be one way of doing that, but very tough on a partner that earns much less than their other half that's in a trust deed? Leave it up to the client and their partner, but obviously open to abuse and creditor detriment? Or apportion it according to income levels, which at least tunes in with affordability and balance according to circumstances in certain obvious ways?

How would you frame guidance on the amount that a partner should contribute while protecting creditor interests?

No problems with arguments or cans of worms. This site's not usually short of either!

Yes indeedy TDA we all like a good can of worms lol....!

Appreciate your comments,I was not advocating any "fudging" of figures, and it is only the new AIB guidelines mentioned that changes the goalposts perhaps. What is fair is an objective point of course dependent on who you ask, and that is why prescribed formulas are used I would assume....The AIB guidelines seem pretty straightforward but maybe we should ask them ?!! The partner's income either is included or it is not?

Still confused and its only Monday.... [:D]

I guess using the "income apportionment" method the partner's income isn't really "included". It's just used to calculate the percentage of shared household bills that the individual in a trust deed should pay.

There again, account of the partner's income is being taken. Therefore their income is being "included" for the purposes of making the trust deed contribution calculation.

So you can easily get stuck on the intended meaning of the word "included" before you can begin really judging how to interpret the guidance.

I think this guidance might have been introduced to avoid the issue that Kevin mentioned in a previous post rather than to change an established method of calculating the sharing of bills. I don't know this to be true though... guidance ends up being interpreted in different ways by different people.

Oh... the other thing Buz...

Different firms may interpret this slightly differently. Of course, when the time comes, you're free to talk to a few and proceed with the firm that you feel best meets your needs and circumstances.