Thanks for sharing that David.

While I think it's a shame that no incentive can be left in place for people to work harder (and therefore repay more to their creditors also), I can also see the logic of John Cook's example.

When you look at it in those terms it isn't really fair on the person with the fixed salary.

Anyone wanting to read a little more about this subject might want to visit the following article:

https://www.trust-deed.co.uk/trust-deed-expenditure-guidelines.html

Hi TDA,

I would agree about the incentive to work harder and in turn earn more money which benefits everyone. I always felt it was about taking a balanced approach regarding this. I had never actually considered the point that John Cook made about the scenario I described.

It's something for people to keep in mind when considering their options. Often people feel that it's the advisor that is making up the rules and we aren't being flexible or we are being unfair in some situations but in fact these things are all pre-determined and set and we have to work with the guidance and legislation.

Will this put people off entering into a formal debt solutions? It might but I hope it won't. I think it's about someone taking a long term view with the ultimate goal to become debt free in a manageable timescale following which that person can then benefit from being debt free and having the increased income from working hard. I realise though that people might not see it like this.

I'm not sue that I can agree with the scenario of fixed salary against overtime/bonus, as both are on a fixed salary! It's just that one has an option to increase through overtime/bonus.

On a fixed salary, the contribution is fixed and contribution static with no room for increase. On the other side, there is the possibility of additional income, a choice which the individual makes. If 100% of any additional income goes to creditors, there's no incentive to do overtime/bonus. On this basis, no overtime will be done and the creditors potentially lose several thousand pounds over the course of the Trust Deed.

Mark

Hi Mark,

I guess some people are expected to do a certain amount of overtime by their employers.

I guess also that some people earn bonuses and/or commission for going about their work competently - something they might choose to do for job security, recognition, and their future career prospects anyway.

It's a finely balanced subject though - with the potential for diminished creditor returns in some instances I'd expect.

Hi TDA

My thoughts exactly. If the rules were at least flexible, then the the people dealing with the cases could make a judgement call on based on individual circumstances.

In my experience, the majority of people have the option of overtime as opposed to this being part of their contract.

I suppose they could always do it and take it as time in lieu instead.

Mark

Hello
I am just about to enter into a Trust Deed next week and have only today been advised of this aspect of the changes to the regulations which took place in April of this year. I have a couple of small pensions which provide the bulk of my income but supplement this with some self employment which provides occasional income when I get a contract. Last week it was agreed that a sum would be paid from my pensions toward the Trust Deed and that 50% of any income from my ongoing work (less costs and Tax) would be paid towards the Deed and the balance left for myself. This week it has all changed and once I sign the Deed next week, 100% of all other income will be need to go towards the Deed. There is then no point in continuing self employment as I am in my early 70s and both the creditors and the Government (Tzx) loose. Where is the sense in that?

Welcome to the forum Max.

In your circumstances as you describe them, there doesn't seem to be any sense whatsoever. I'd imagine this must all feel strange and disappointing to you.

In other circumstances I think the change makes more sense for creditors and is more fair on certain types of employees.

It takes us back to Mark's point about a trustee making a judgment I suppose.

Hi Max,

Do you receive private pensions along with your state pension?

Is there a reason that you wanted to continue working into your early 70s? Many people continue working to try and service their debts when in fact they could go down the route of Sequestration and in certain situations not have to pay any of their debt back but don't realise this.

Without knowing anything about your particular circumstances it's hard for me to say what your options could be. If you stopped working then this will reduce your income and as long as you have enough from your pensions to live on and pay your bills you could still proceed with Sequestration or a Trust Deed.

If you are happy to share a little more information about your circumstances we could give you some advice on the forum.

It's another one of those areas where guidance is provided, but still not 100% clear. The new guidance states that there is irregular overtime or bonus payment or in thios case potential contract works, then this should be averaged over a 12 month period and a contribution assessed on that basis.

It would be difficult to accurately assess potential work. If this was assessed and was found to be too high, then would there be a refund or if it was too low, do you seek a payment from funds which would have probably been spent!

Mark