Welcome to the forum Bigred.

Yes - it's important that you let your trustee know ASAP.

Is it a large amount?

Thank you for speedy response.

Its somewhere in the region of £1500.

Thanks,

Hi Bigred and welcome to the forum,

This is actually quite common and happens more often that people think.

Your best to let your Trustee know as soon as possible.

When a proposal is made to the creditors they are told that they will receive X p in the £ at the end. If as a result of entering further debts later on down the line it changes this return then you can be asked to increase your payment to the Trust Deed.

Contact your Trustee and let us know how you get on. I'm sure there won't be a problem.

David, why would bigred be asked to increase his payment? Presumably s/he has been assessed as being able to pay a certain amount per month and if the trustee asked him/her to pay more, without any increase in income, they would be eating into his/her essential living expenditure?

If bigred made a genuine mistake, why should s/he have to cut back on their essential expenditure?

Isn't this why there is an advert placed in the Edinburgh Gazette, so that creditors are alerted to the trust deed?

I agree with GayleC here.

An extension wouldn't cause the same issue.

Not sure I agree with an extension either in this situation, TDA. Surely someone signing a trust deed has a responsibility to pay what they can for the duration of the trust deed (the duration being specified within the wording of the trust deed document itself) and an extension should only be if they have missed payments for reasons other than a fall in income, or to buy out value of assets.

If genuine mistake with a forgotten creditor then I see no reason why someone should be asked to pay more.

If a creditor submitted a claim which was higher than had first been indicated would you ask someone to pay more? I doubt it. So why should this be any different?

I understand if someone deliberately didn't disclose a debt, obviously that's not right, but sounds to me as though bigred made an honest mistake when forgetting that one and to suggest he/she would be asked to pay more just sounds wrong.

Is the onus on bigred to pay as much as they can afford throughout the trust deed period, or is it to deliver the dividend which was estimated at the outset? Those are two very different statements - be good to hear the views of the representatives from the firms on the forum.

Nobody is saying that this would happen - just that it could.

Creditors make decisions about trust deeds based upon the offers made to them. Their interests need to be factored in as well.

Bigred should be fine as it has come to light at an early stage (it seems at least) so the trustee can be informed and adjustments made if necessary.

Hi GayleC & tinsoldier,

Under a Trust Deed an individual is required to make an adequate level of contribution that the creditors will be prepared to accept when they are issued with a proposal to consider accepting or rejecting the Trust Deed.

Creditors receive this proposal and it's then up to them to consider if they are prepared to accept or reject the proposal. Generally it's expected that a minimum return should be 10p in the £. Even if this proposal is 9.9p in the £ some creditors will object to the proposal. As a result an advisor will try to ensure that if a client wants to proceed with a Trust Deed then they can afford a payment which the creditors will accept.

Under section 2.6 (Liabilities) of the Notes for Guidance for Trustees under Protected Trust Deeds The debtor must provide information at the outset in relation to all of their debts.

Advertising the Trust Deed in the Register of Insolvencies (it used to be the Edinburgh Gazette but not since November 2013) does bring it to the attention of creditors who are unknown. If in the event that further creditors do come to light (prior to the Trust Deed being registered as a Protected Trust Deed) then I think it would be prudent for the case to be advertised again and another proposal made to creditors to allow them a fair chance to consider it. It sounds like Bigred is in the early stages of his Trust Deed so this could be an option.

If you are a creditor and you expect a certain amount back and this is what you have agreed to and then it turns out that as a result of an individual failing to declare all of their debts at the outset you are going to receive less money back is that fair. A trustee's responsibility first of all is with the creditors but they also have a duty of care to the individual.

Across all Scottish statutory debt solutions when assessing what a client can afford to pay per month we need to use the Common Financial Statement. Once we have completed this with a client we are then in a position to know what options that client has available to them to deal with their debts. Each plan should be driven by the individuals ability to pay a sustainable payment per month. If a client wants to enter into a Trust Deed but their disposable income isn't enough then they have a choice to make. Do they accept this and proceed with Sequestration or do they adjust their budget, look for ways to cut back on spending to be in a position to afford the payment per month. For example a person is allowed to have sky/virgin TV. What if they decided to give this up to free up disposable income to afford a suitable Trust Deed payment.

During the course of Trust Deed's on an annual basis the Trustee is required to send a Form 4 (Trustee's Statement of Status of a Protected Trust Deed) to all creditors, the debtor and the AIB. If the estimated dividend has varied and is less than 80% of the final declaration in the Form 3 (Trust Deed Protection Proposal and Trustee's Application) then the Trustee must provide the full reasons for this fall and their reasons for their recommended course of actions. Creditors have the chance to object to this course of action.

Courses of action could be:

1. Petitioning for the sequestration of the client
2. Resigning from office
3. Continuing with payments and the Trust Deed and making a reduced payment to creditors.
4. Increasing the payment to maintain the agreed dividend.

I do understand the points which you both make. It's about finding a balance between the creditors, their expectations of a return and also the individual.

As I said, I didn't say that would 100% happen, just that it can happen and is dependent upon the particular circumstances of the client.

To Bigred, a quick call to your Trustee and they will be able to confirm the position. Like I said, I don't think it will cause any big problems for you.

More creditor powers were brought in when the Trust Deed legislation changed in November 2013, GayleC. The Trustee has to report to creditors on an annual basis as to what return is likely to them - if it is sufficiently diminished as against what was originally estimated then creditors have the right to request for the Trust Deed to be terminated.

Obviously a reduction in dividend could be either as a result of undeclared debts or a change in circumstances, either way a Trustee has to bear in mind Creditor interests too in order to ensure that the Trust Deed can complete successfully.

As you rightly say, the monthly payment should not change as this is determined by applying the Common Financial Tool, but the term of the Trust Deed can be extended if it is felt to be necessary and if the debtor is happy to do so. Whether it would in this case would probably come down to a number of factors - principally how much has the expected dividend fallped and what is the attitude of the Trustee.

Looks like David beat me to that answer, with a much more in-depth one! Will need to get my fingers working faster!

Thanks David

I'm not sure if the rules have changed, but when I was discharged in 2011, no dividend was paid to my creditors. I had a change of circumstances 6 months into my TD (4 day week at work) and that lasted for 18 months. My payments were reduced accordingly but no extension to TD.

How was this?

The rules did indeed change, tinsoldier - the above only relates to Trust Deeds signed after 28 November 2013.

Hi tinsoldier,

I think Kevin has covered this in his post with the change in legislation in 2013.

Again it comes back to the discretion of the Trustee, the guidance and legislation and also dependent upon circumstances of the individual.