Welcome to the trust deed forum Treen.

There do appear to be some potential advice issues I'm afraid.

Advisers know that the common method for assigning disposable income between a couple is based upon a pro rata share according to their relative income levels.

That could lead to the conclusion that your adviser did not know this,that they did know this and chose to ignore it for some reason, or that a mistake has been made somewhere. I might well be wrong, but it could be that this was ignored in order to make a trust deed appear to be viable for your husband (it might not have been if his trust deed payment had been reduced by your share of the disposable income).

Was the adviser that came to see you from the actual trust deed company, or from another company that then referred your husband to the trust deed provider?

Could you confirm what was originally agreed for your husbands trust deed (the number of months, and the monthly payment) please?

I'm stunned at the prospect that someone acting on behalf of the trust deed provider has indicated that you "must" change your life insurance policy. If that were the case it seems like a case of mis-selling but hopefully it relates more to a misunderstanding somewhere along the line. You may not be surprised to know that selling life insurance results in very large commission payments to the seller.

Your husband cannot enter into sequestration unless he is discharged from his trust deed. If he failed to co-operate with his Trustee, perhaps by stopping his payments, this might happen. In this situation the Trustee could also sequestrate him. I wouldn't rush towards doing this at this point. You'd want to be absolutely sure that the house has no equity in it first (it sounds like you might be?) and I'd be interested to hear back from you about the original trust deed agreement (months, monthly payment, and whether the visitor to your home was from the actual trust deed provider or an intermediary firm) as well.

Sequestration would last for three years. On the surface of what you have described to us about the situation, it seems hard to understand at this point how your husband is currently best served by a five year protected trust deed.

Thank you for answering so quickly.

I contacted a well known company, Trust Deed Scotland,who then arranged for an advisor from RSM Tenon to visit. We had initially phoned asking if we should go bankrupt. We were in a DMP but our tax credits had dropped by over £200 because our oldest son had reached 18. We had been paying £256 to the DMP per month. We realised that the DMP was not going to work at this stage and we thought that we didn't have enough spare income to enter a trust deed. When the advisor visited we were told right from the start that my husband should enter a trust deed as his debt was the lowest and his income the highest. As I said I was told my income was too low and also that only my basic wage was counted not weekend and unsocial hours (which in fact are counted by the AIB). The advisor said that the company would take on my hubbie's case but not mine but would help me fill in the sequestration form which she did at home with me at the same time as having my husband sign his trust deed paper. This was all a huge relief at the time.

The payments were to be £200 per month for 36 months. This was all of our left over money per month. My husband has only paid one payment so far, his first, this month. I have since found out that I will be paying £85 per month directly from my wages towards my sequestration. After informing the trustee of this he is now to pay £92 for the remaining 3 years then £177 for 2 years after that.

We did ask about him going bankrupt but that part of our email was ignored. As I said we only had a reply telling us to change the standing order and that the trust deed would now run on for 5 years.

The house was valued for the trust deed and the amount due on the mortgage at that point was £300 more than the house was worth hence no equity. The house is to be revalued by the AIB so I am hoping that they will give a similar value. To be honest I have resigned myself to the fact that I may lose the house eventually. I do not have the means of finding the £515 required for my trustee to relinquish interest in any equity that may arise over the 3 years.

It was Trust Deed Scotland who phoned about the insurance. At first we thought it was a requisite for having the trust deed. I asked if I couldn't just take out a new insurance policy at the end of the current one. I was told that wouldn't be possible. The guy on the phone mentioned something about keeping the money in trust if one of us died during the 3 years. Not really sure what that meant. I couldn't understand why it was relevant when we both have life insurance which last well past the end date of the trust deed.

We just wondered if there was such a thing as a cooling off period after signing the trust deed. My husband has only made one payment and we've been told that he must pay what the creditors are expecting hence the extra 2 years. I think it would make more sense for him to go bankrupt, it's just knowing how to go about it. Can he ask to do this? He'd be quite happy to fill out the form and send it to the AIB as I have done.

Hi Treen,

If it turns out that sequestration is more suitable for your husband given the amount requested from you by the Accountant in Bankruptcy then we can certainly take steps to make that happen instead.

With respect, I must take issue with the analysis provided by Trust Deed Assistant above however. It certainly is not as straightforward as calculating each partner's pro-rata share of disposable income. Each individual's creditors can only expect to receive what is affordable from the income of the individual that owes them the money. In other words, each individual's share of the household costs, as well as their own personal costs, should be deducted from their own income and the resultant amount is what should be made available for that individual's creditors, not a simple pro-rata split.

If both parties were signing trust deeds then there is more room for flexibility here - after all, creditors are choosing whether or not to accept the proposals put to them. I don't know the specifics of how much you each earn, and how much your joint expenses are etc, but it seems to me that the problem here may have been caused primarily because the agent for the Accountant in Bankruptcy is effectively asking your husband to subsidise your sequestration, at the expense of his creditors interests.

I'm not sure whether your husband's case manager contacted the AiB's agent to challenge their calculations, but this should be the first port of call. If they were unwilling to change their stance, then we would be in the position where you have unfortunately found yourselves - either amending the trust deed to accommodate the £85pm, or converting the trust deed to a sequestration, or formally challenging the contribution sought by the AIB in court.

As I said before, there is no problem in switching to a sequestration instead if that is what your husband would prefer - and this option should have been explained to you, so my apologies if, as it seems, it was not.

Regarding the life insurance aspect, please be assured this is nothing to do with RSM Tenon. It is most certainly not a pre-requisite and should not be being sold to you as if this were the case. However, I have just spoken with the relevant director at this company and he has assured me that they only ever recommend a change in life insurance provider if it is beneficial to the individual (eg increased cover for a similar premium) and would never suggest that such a change is in any way a pre-requisite to signing a trust deed.

Thank you both for your replies.

I am still confused by it all to be honest and we don't want to be seen as uncooperative. I did ask KPMG who are administering my sequestration about taking into account the £200 that is being paid into my husband's trust deed. Their reply was as mentioned before that he should pay less and that I must pay something towards my bankruptcy.

I bring home about £80 less per month than my husband and we receive child benefit for 2 children plus £112 tax credits. We have a joint bank account and we share all of the bills, mortgage etc. Apart from our household bills my husband has no other expenses.

I personally owe about twice as much to my creditors as my husband does to his. We have one joint debt which was an old overdraft.

I don't think the AIB was contacted by my husband's case manager.

I realised straight away that the insurance was nothing to do with RSM Tenon as the man on the phone said he was with Trust Deed Scotland. This is why I was dubious about it all and didn't accept their quote. I have asked them to put it in writing for me.

My husband will contact his case manager again tonight to see what the options are although we have already asked. It seems that there are a few different ways to tackle this. Thanks again for all your help.

Thanks for clarifying some of the figures for me Treen, based on this I would agree that it may well be that sequestration may be more suitable for your husband, though the option is there to stick with the trust deed on the amended terms if he prefers. I was thinking I would call you/your husband myself to discuss this some time this afternoon, if that is ok with you?

Hello Treen.

To expand on my previous comments I think Kevin makes a fair point that there are other (similar) ways to look at the division of a couples disposable income rather than it always being a direct pro rata split.

I did suspect in my earlier post that it was unlikely that a firm of insolvency practitioners would be marketing life insurance in the way you describe; that's why I asked whether the visitor you saw was from a referring company. I'm glad that both you and Kevin have confirmed that RSM Tenon are in no way involved in that. I'm also pleased to hear from Kevin that a Director at the company mentioned in connection to this has indicated that their policy is only to encourage the switching of life insurance where it makes sense for the insured(s). The point made previously about a life insurance policy being placed in "trust" might be important and you might want to look into it with the help of an appropriately qualified and regulated financial adviser.

Kevin has been very open in his responses to your thread which I think is very welcome. I'd suggest taking him up on his invitation for a chat as it seems his firm are prepared to show flexibility to ensure that your husband has a choice about the best way to proceed from this point.

Yes thanks to you both for your honest advice. We obviously want to do the right thing and pay back as much as we can afford.

I'll PM you, Kevin, with our details.

Hi Treen

Glad that Kevin is going to be able to fix things for you. Things do go wrong sometimes, but it is how someone corrects things when they go wrong that matters, so well done Kevin.
With regards to your life policy being 'in trust' - it just means that if something should happen to you whilst in your Trust Deed, the life policy would not be paid to your Trustee, but directly to your next of kin after 30 days...pretty good really!