Hello pipsaholic.

Yes - people can and sometimes do enter a trust deed more than once.

If your income is solely from state benefits a trustee is very unlikely to be able to accept a contribution from you. Is this something you have reason to fear is likely to happen to you?

Trustees are forbidden from accepting any payments from state benefits these days. Usually the payments would be suspended for a while if you were out of work.

Hi pipsaholic,

People can enter into more than 1 Trust Deed and I have dealt with people who successfully completed their Trust Deed and a number of years later required a 2nd one.

As Kevin has said Trustees are prevented from accepting payment from benefits and the legislation is quite clear regarding this. If you entered a Trust Deed and became unemployed your payments will need to stop until you regain employment.

So if your unemployed for say 6 months or 12 months your payments would stop completely? So, what happens to the 4 year discharge stay the same?

Also, what if your income comes from a friend or family member along with state benefits? Can you do a 50/50 payment some from them and some from your benefits?

Also, if you take out income protection insurance while working and you get made redundant and they pay you 60-70% of your salary can you use that to make your contributions towards your TD.

Hi pipsaholic.

We've heard of scenarios where a trustee would not extend a trust deed where the individual had lost their income through no fault of their own for a period of time. We've also heard of scenarios where the trust deed would be extended in lieu of missed payments in order to ensure that the creditors get a return in line with that they originally agreed to.

The point with benefits is that a trustee cannot take any of them from you. So, if your trust deed payment were £150 per month, you'd need at least £150 per month of private income in excess of your total benefit income in order to continue the payments (and they'd need to remain affordable).

In the event that your income were to reduce to 60% or 70% of what it was previously, I fear many people would be unable to keep up with their trust deed payment. Money would have to be prioritised for essential bills and expenses first. However, a trustee would need to review each case based upon its precise facts in such a scenario.

So, in 4 years if say 2 years you were unemployed through whatever reasons and you were unable to make your TD payments as you only have state benefits to live on what is the general procedure at no fault of your own? Obviously the creditors won't get 4 years of payments agreed at the start? What happens to the 4 year discharge?

Hi pipsaholic.

I don't think that there is a general procedure. I think the trustee will review the scenario on its own facts and merits and apply their judgment from there. They'll be minded to find a solution that treats both their client and the creditors fairly.

What might that mean? In some scenarios it might lead to a conversation about whether a trust deed remains an appropriate solution and consideration of a switch to something else. In other scenarios it might result in the trust deed continuing towards the four year point with discharge still expected to be then. In other scenarios it might result in an extension in lieu of a period during which no contributions have been made.

Is this a scenario that applies to you? Is this a scenario that you're fearful might apply to you in the future?

A trustee has to send an annual report to every creditor to update them on the progress of the Trust Deed, which includes an estimate as to how much creditors are likely to ultimately receive towards their debts (their final dividend).

In circumstances where this estimated final dividend is sufficiently lower than what was originally proposed, then the Trustee has to give the reasons and a recommendation as to how they intend to go forward. Creditors then have the opportunity to object to the proposed course of action if they wish.

The upshot is that generally-speaking I guess most trustees seek to recommend a resolution that seems reasonable and fair to all parties depending upon the particular circumstances.

TDA - It doesn't apply to me yet just curious. I don't know if it will apply to me better asking isn't it beforehand?

Kevin - So, basically what you're saying is that there is a negotiation between the client and creditors or the trust deed consultant and creditors?

An example would be I was paying say £150 towards a trust deed for 6 months when the company i worked for went bust I got redundancy package which I can survive for 3 months I would be able to maybe pay £100 per month for 3 or whatever months after expenses? However, if the company i work for didn't give me redundancy package for whatever reason I cannot afford to pay my trust deed until I find work again which could be 12 months in this day and age. However, i could pay from state benefits however that's not allowed is it? Would I be expected by creditors to find money to pay for my trust deed or will my discharge still be 4 years?

Hi pipsaholic.

The trustee forms a view on the best way to take things forward, then the creditors can object to it if they choose to.

In your example, you'd keep any statutory redundancy pay. Anything extra might have to be paid into your trust deed as a lump sum. You'd need that statutory payment to tide you over until new work was found so continued trust deed payment might well be impossible.

In terms of when you'd be discharged, it depends on what the trustee decides is appropriate and how the creditors respond to this suggestion.

How reasonable are the creditors do they accept people financial circumstances most of the time?

Also, if you receive unemployment insurance (ASU insurance) after being sick or redundant can you use a portion of that to pay for your trust deed while not working sometimes unemployment and sickness can last 6 to 12 months?

Also, if your married or have a partner living with you does a trust deed affect them too or is it just an individual? Can both of yous be on a trust deed? What about children over 18 can they be on a trust deed or anyone else living at that address?

They'll very often accept the trustee's proposals pipsaholic, trusting their judgment.

The thing about ASU policies is that they often pay a fair bit less than your salary, 60% or 70% for example. You'd probably need all of that to pay bills and expenses, so a trust deed payment may well be unaffordable.

A trust deed is an individual arrangement, only the person signing one is bound by it.

Can you give me reasons why a discharge would be extended? What percentage of your debt to creditors look for that they are happy with there must be some sort of minimum they look for when individuals are going through financial hardship?

There are no set answers here, pipsaholic, as there are too many variables. Different trustees will have different views on how they would treat different issues. Add to that the fact that different creditors may also react differently and I'm sure you can see why your question is really impossible to answer.

Generally speaking I would say that an issue that is completely beyond the control of a person might be looked upon more sympathetically than something that is their own fault (eg dismissal from job for misconduct or choosing to quit a job/work less hours etc).