Welcome to the forum ikaw.

I hope it wasn't described to you as a "quote"?

It's really very important that you do not commit to any type of debt solution unless you believe that the payment will be manageable and sustainable.

If you read around this forum you'll find stories of the difficulties that agreeing to too high a payment can cause.

Where circumstances take a turn for the worse the trustee has to make a balanced decision.

They should not seek a contribution from you which is not affordable, so the payment might have to go down. They will not want to see you "punished" if the change of circumstances has been outside of your control.

Likewise, they must consider the interests of the creditors. If a change of circumstances is very significant the trustee might have to decide that the trust deed is no longer fair on them because they don't stand to receive anything like the amount that they originally agreed to. The trust deed might fail and other options have to be considered. Alternatively, it might have to be extended to enable the creditors to get a fair return from a lower monthly payment.

Where a negative change of circumstances is voluntary, for example someone chooses to move to a job with lower pay, the trustee will have to be very careful to ensure that the interests of the creditors are supported.

Having said all of this, over the course of four years circumstances will change for many people and there are processes that can often accommodate this. For example, there might be a payment break (and extension) to help someone after being made redundant while they find new work. Generally speaking, in most situations it's beneficial for all parties to find a fair solution if one can be identified where things change.

I think the main point however is not to go into a trust deed, having agreed to a certain monthly payment, assuming that your payment can go down if you're struggling to keep up with it. Unless something material has changed with either your income or your expenditure that's quite possibly not going to happen.

Setting things up right from the start is a massive step towards ensuring that the whole process proceeds smoothly thereafter.

Hi ikaw, welcome to the forum.

A Trust Deed certainly can and should be adjusted to allow for changes in circumstances - both good and bad. It is possible that you may be asked to extend the term of the Trust Deed so that the payment to creditors isn't too badly affected, but not necessarily.

The Accountant in Bankruptcy's guidance to Trustees states that a Trust deed should not be terminated as "failed" if it is purely as a result of a change in circumstances beyond your control.

Hi ikaw,

Welcome to the forum. Well done on taking positive steps to try and deal with your financial difficulties.

In terms of your monthly payment this should be worked out by using standard expenditure guideline figures which all firms are required to use. Effectively what this should do is regardless of whichever firm you use they should arrive at the same payment per month which you can afford to pay to either a Trust Deed, Sequestration or a Debt Arrangement Scheme.

Has the company that quoted you a payment of £130 per month worked through a thorough income and expenditure with you?

Also, do you have any assets i.e. own your home or have a vehicle?

TDA has summed up what would happen if there is a change in your circumstances during the period of your Trust Deed. Is there a likelihood that there could be a change in your finances i.e. a loss of a job or reduction in income? I know it's hard to project things like that but you could have (for example) a dependent child that is due to leave full time education or be in a temporary or fixed term contact that could impact your finances. A good advisor should ask you things like that to try and plan as best they can for the future.

The most important thing when deciding what to do is to speak with a couple of advisors, discuss all of your available options and then to receive everything in writing with regards to exactly how a plan will work for you.

Hi ikaw

The key this that most people forget is the proposal at the start. The Trustee offers a proposal to pay a certain pence in the pound to creditors and they accept or reject this. On acceptance, creditors agree that they will no pursue for the balance on the basis that the agreed dividend is made and that is your part of the deal I guess.

If there is a reduction, the normal process would be to look at an extension to ingather the total. That way you have met your obligations and this allows the Trustee to finalise and ultimately close the Trust Deed.

If you think that there is likely to be a change in circumstances, then you need to consider your options as you should be 100% sure before enetring into any agreement and perhaps see if any other options suit the circumstances.

Mark

I can't agree with that, Mark. There is no offer made at the outset to pay a certain pence in the pound, merely an estimate of what the likely dividend to creditors will be. Whether or not this is achieved, or even exceeded, will depend upon how things pan out over the term of the Trust Deed.

There is no requirement to reach the dividend estimated at the start if there is a good reason why it is not possible.

As we've read here before, it's not uncommon for trust deed providers to interpret similar issues in different ways.

I guess that this comes down to their interpretation of the rules and guidance that is set down, and also to other sources of information and advice that they have been exposed to.