Hello trixie and welcome back to the Trust Deed forum.

Hopefully your husband will find work soon and this need not become a problem. Best to let your Trustee know if you have not already. Situations such as this are not uncommon and they may be prepared to help with a payment break to help him find new work.

?ú4000 is a comparatively low equity figure. I'm wondering whether the experts feel that it might be ignored, in sequestration, given that the costs of sale could easily cancel this out?

Hopefully we'll hear from one or more of them soon.

You can read much more about bankruptcy in Scotland at:

https://www.trust-deed.co.uk/bankruptcy-sequestration.html

Ignored would probably be the wrong word.

Should your husband be sequestrated - declared bankrupt - it is likely that the Accountant in Bankruptcy will be appointed as Trustee. They can either keep the case in house or pass it out to one of 6 approved Insolvency firms who can handle cases on their behalf. Those firms are

Armstrong Watson
Hastings & Co
Invocas
KPMG
Miller, McIntyre & Gellatly
Wylie & Bisset

The allocation will depend on where your husband currently resides.

These firms have a duty to comply with Accountant in Bankruptcy procedures. Therefore they will initially contact your secured lenders and subsequently carry out a valuation of your property in order to determine the equity in your property. Should your husband have those details available this should speed up the process and hopefully allow a swift resolution to your concerns.

Now, those firms mentioned, have a duty to be seen to attempt to maximise the return for your husbands creditors therfore, they will seek to realise the ?ú2,000 equity. I want to make it clear however that that a forced sale would always be seen as the last resort.

Initially it will be asked whether a third party can provide a sum equivalent to the ?ú2,000. This is not always possible, other options put to you may be the Mortgage to Rent Scheme.

Given the information you provide however it is unlikely that any of the aformentioned firms would progress to a forced sale of the property as any potential equity released would be off-set by the costs involved.

This would put you and your husband in a position to be able to negotiate with the firm involved. If you have a third party i.e family/friends, who are able to provide approximately the sum of ?ú500 i would hazard a guess that those firms would be willing to accept the sum as it equates to the minimum payment required to release interest in a property.

Hope this information helps, let us know how you and your husband get on.

Hi Trixie

Sorry to hear about your husband losing his job. One thing that hasn't been mentioned is your husband's redundancy payment. Did he receive one? If so the trustee may be entitled to seek payment if some of the package he received is in addition to the statutory payment.

Julie

thanks Mole

I have read over your Post and from what I understand - the Accoutant in Bankrupcy is part of the Scottish Executive and deals with the majority of sequestrations in Scotland. I have heard that they have been successful in introducing a new Route into bankruptcy and are trying to over haul the Trust Deed process.

I am curious as to why the three "Expert" firms on here are not endorssed by the Accountant in Bankruptcy and why they do not obtain work from the ACcountant in Bankrupty.

Any advice would be appreciated.

Julie

From what I understand, any redundancy payments could be regarded as "income" and would not in terms of Section of 32 of the BA Act vest in the trustee.

The trustee may try and arrnage a deal in order for you to be discharged ie - pay off your trust Deed earlier but if not, i wouldnt be as forthcoming with the redundancy payment.

Your redundancy payment is as a result of you losing your job. You will need this to live for the time whereby you are actively seeking work.

.

Thankyou all for your advice
My husband has not yet receieved his redundancy but its due soon, he is expecting only the statutory payment, no more than ?ú2000, as he was only with the firm for 2 years. However ?ú1000 of this may need to be paid to mortgage firm, who agreed to nominal payments of ?ú100 for last two months. But its a good point, this might help with release of his share of equity. However the matter is complicated further by the fact that its likely we will both need to go bankrupt as without his salary, after household bills are paid there is no money left at all to make my TD payments.
Mole mentioned negotiating a sum of ?ú500 to release interest in equity. If this was an option would that be ?ú500 for each trust deed or a single payment? Either way this looks like the best option for us-if we,re not forced to sell!

Hi Trixie

Whilst never wanting to be the bearer of bad news, there would be a requirement for a payment to release the Trustee's interest in the property, from each individual party.

The matter would be complicated still further by the fact that should the same Trustee be appointed in both cases - which as far as I am aware is the policy in place at the Accountant in Bankruptcy - it is less likely that he/she would be willing to write off ?ú3,000 worth of equity as opposed to ?ú1,500 were it simply your husband.

The legal costs of a forced sale would however, still outwiegh the sum of ?ú4,000 so there would remain the opportunity to negotiate directly with them.

I take it there are no family/friends who would be able to assist in the matter? Even if by monthly instalments, which most Trustee's would be willing to accept if made by a third party and within a "reasonable timescale"?

Hi Mole,
We might be able to borrow maximum ?ú1500 from friends plus we'll have redundancy money. However we already owe ?ú1200 to family which we cant pay back at the moment so we dont want to borrow even more money that we dont know if/when we'll be able to repay.
We looked into the Mortgage to Rent Scheme but the maximum the Local Authority will pay for our property is ?ú20,000 less than the value, so not an option.
Negotiating directly with the Accountant in Bankruptcy/trustee is our best option. If we negotiated with them and offered eg ?ú2000 (?ú1000 each) would they be less likely to force sale?

Trixie

It is very hard to guess what any particular Trustee would do in advance.

I can re-assure you that as far as I am aware the Accountant in Bankruptcy have laid out processes for all of their work providers to follow which ensures that the forced sale of a property is always the last resort.

I would imagine most trustee's would snap your hand off for ?ú2,000 from limited equity of ?ú4,000 perhaps the licensed IP's on this forum could post their thoughts on the matter.

bpm45d0,

I'm afraid you may have misunderstood the situation you refer to.

The Accountant in Bankruptcy asked all IP firms in Scotland if they wanted to tender for this work.

Some made a commercial decision to tender. Some made a commercial decision not to tender.

Using the word "endorsement" for certain firms, and implying others are therefore in some way not endorsed, misrepresents the actuality.

There are lots of good Trust Deed firms that are neither featured on this site nor chosen by tender to handle Accountant in Bankruptcy work.

A quick read around the forum will also reveal a number of Trust Deed firms that seem to repeatedly confuse and/or frustrate their clients.

quote:

---

Originally posted by bpm45d0

thanks Mole

I have read over your Post and from what I understand - the Accoutant in Bankrupcy is part of the Scottish Executive and deals with the majority of sequestrations in Scotland. I have heard that they have been successful in introducing a new Route into bankruptcy and are trying to over haul the Trust Deed process.

I am curious as to why the three "Expert" firms on here are not endorssed by the Accountant in Bankruptcy and why they do not obtain work from the ACcountant in Bankrupty.

Any advice would be appreciated.

---

I agree with what The Mole has posted here trixie, the costs of forcing a sale would undoubtedly exceed the equity (assuming your figures for the value are accurate) so I would be very surprised if a deal could not be negotiated as described above.

Just to answer the question set by bpm45d0 above, regarding being endorsed by the Accountant in Bankruptcy, I'm afraid they may have misunderstood. The six firms mentioned aren't "endorsed" by the Accountant in Bankruptcy(AIB), they merely won the most recent tendering process to act as agents on behalf of the AIB in some sequestration cases (ie they were successful in a bidding process). It does not in any way mean that any of the other multitude of licensed insolvency practitioners out there are any less capable/professional.

Hi Trixie, if your husband is only receiving statutory redundancy there won't be issue.

bmp45d0

In a previous post Mark explained, in great detail, how a redundancy payment is dealt with. To save you the effort of trying to find this post I have copied his post for you. Hopefully this will clarify matters for you and hopefully Mark won't mind me copying it!

Where a debtor is made redundant and receives a severance payment from his employer, the question arises as to whether this payment, or part of it, vests in the trustee under Section 32(6) of the Act.

The Accountant understands the facts of the case to be as follows.

During the relevant period, as defined by Section 32(10) of the Act, Mr McGrail was made redundant and received a severance payment of ?ú5,050. This sum was made up of four elements:
Statutory redundancy payment ?ú 810
Payment in lieu of notice ?ú 810
Company ex gratia payment ?ú1,000
Additional payment based on years of service & wages ?ú2,430
?ú5,050

The trustee conceded the payment in lieu of notice was income but claimed the remaining ?ú4,240 as acquirenda. This approach was later approved by the sheriff. The debtor disputed this approach and applied to the sheriff that this amount be excluded from vesting in the trustee, under Section 31(6) of the Act.

After hearing the solicitor for the debtor and for the trustee, the sheriff held that:

the statutory redundancy payment of ?ú810 fell to be regarded as alimentary in nature and therefore as income which did not vest in the trustee;

the other payments made by the company which were voluntary did vest in the trustee.

When dealing with payments made on redundancy, it will be necessary for trustees to identify that part which represents the debtorÔÇÖs statutory entitlement and care will be required in those cases, such as McGrail, where it is company policy to pay an enhanced sum. In some cases such an enhanced sum might be loosely termed the ÔÇÿredundancy paymentÔÇÖ.

Once a debtor has received his statutory redundancy payment, the trustee should consider whether a contribution or increased contribution should be sought. In this regard, the trustee should bear in mind that receipt of a redundancy payment does not immediately debar the debtor from receiving unemployment benefit under Section 20(3A) of the Social Security Act 1975.

Julie

Julie

Yes i agree - thge trustee would be entitled to seek payment but that does not automatically give a right for the payment.

Redundancy payments are taxed by the employer and I would argue that it is Income. The Sheriff didnt fomally issue a judgment in this case. The AIB is not the Court and has issued for Notes on Guidance.

Unless the Case is tested further in court - i would suggest that you keep redundnacy payments and wait for the Trustee to raise an action. THIS WONT HAPPEN as the costs of the action would potentailly outweigh costs

kind regards

Hello trixie,

Contact your Trustee to discuss the redundancy payment and how that will be treated.

The three experts from this forum have posted a number of times that there is a difference between statutory redundancy payments (which employers have to pay to employees they make redundant), and redundancy payments made in addition to statutory payments as a result of beneficial contract terms or negotiation.

The statutory element, as Julie wrote, should not present a problem.

If there is further payment on top of this your Trustee may want it to be paid over.