Hi no.1mum.

I think we really need to break this into two different issues.

In terms of the windfall, part of the agreement you offered to creditors (and that they accepted when they allowed the trust deed to become protected) is that windfalls will be paid into the trust deed to help repay your creditors more towards what is owed to them. As such, I'm afraid I think it's very likely that the full amount of the inheritance will need to be paid over.

The way it works, such a windfall "vests" in your trustee. That means the money isn't really yours. As such, serious problems could be caused if you decided to retain some or all of the money without prior permission from the trustee.

If there is a problem with the monthly payment now might be a good time to raise it. You may wish to ask for a copy of the budget that they hold to calculate your monthly contribution to the trust deeds. If there are errors in that document they should be pointed out so that a reconsideration of the monthly payment can be made.

hi trust deed-assistant thanks for your quick reply,.ive just been looking over our trustdeeds and my husbands expects to realise £11400 over the 5 yrs.do you think there is any way of putting to our trustee a away of reducing the term or monthly payment as we are in a longer than normal trust deed.i understand that this wont affect my trust deed,iam only getting tax credits so my husbands income pays both trust deeds does make things a struggle.they redudued our payments at the start of the year but when we add income and outgoings we can only afford around £140 a month between us but we have to pay this amount each.can you tell me if i would be asking for the impossible? is there a minimum amount of monthy payment they would accept from me? thanks.

Hi no.1mum,

Was your only income the tax credits at the start of the trust deeds?

The problem with reducing the term or the monthly payments is that your trust deeds were voluntarily put to your creditors on the basis of them lasting five years, and accepted by them on that basis.

There may be scope for the monthly payment to further reduce if aspects of your income and/or expenditure have changed in a way that means your current payment is unaffordable.

The problem is that if your capacity to repay has reduced as much as you say it might be considered that the trust deeds are no longer viable and that other solutions need to be found.
However, you cannot carry on for years paying over money that you dont have so there might be some tough decisions to face up to.

Do you own any significant assets in terms of a home, cars worth more than £3000 etc?

Hi No.1 Mum,

TDA makes many valid points from:

a. Windfalls vesting/conveying to the Trustee for the Benefits of Creditors
b. Scope to reduce the contributions
c. Capacity to pay v viability of the Trust Deeds
d. 5 years is a long time paying over money you do not have

The problem will not go away and it sounds as if you need to sit down with the Case Administrator to iron out some of the issues.

Will they accept the windfall is a bonus and reduce the level of contribution to a more manageable level whilst not increasing the term of the Trust Deeds. Only your Trustee can answer that.

Was it extended to deal with assets - Heritable Property/Vehicles etc. If this is the case it could be problematic reducing the contribution.

You say the figure of £10K would have been life changing and that you think going into the Trust Deed was not a great move - what level of debt did you both have in relation to the setting up of the Trust Deeds?

hi trustdeed assistant,yes at the start my only income was tax credits and my husbands income from employment,we have seperate trustdeeds but our joint income is used to work out payments.at the start we paid 360a month it was reduced as we were struggling with the amounts and they agreed that our income had reduced and outgoings had went up due to fuel costs.the problem is on paper i worked out we only had around 140 left to pay to our trustdeeds but was to scared to ask for such a big reduction incase they made us bankrupt and we lost our house,so agreed to 140 each.we have already paid £500 to protect equity there is minimal equity not negitive equity thats why £500 pound was agreed.our car is only worth around £1500.does the fact that we have this £10,000 help us in anyway to negociate a soloution.

I'm a little surprised a trust deed was suggested for you no.1mum as it seems your husband's creditors are subsidising your own.

Chris makes an interesting point about the inheritance that you may wish to raise with your trustee. I'm not really certain that the £10000 gives you much scope for negotiation as it has vested in your trustee already. No harm in trying though to see what happens.

I'd have thought there should be more room for manoeuvre given that creditors will be receiving a better return than they anticipated. I think it would be very harsh to reap the benefit of good fortune (ie windfall) but not be accommodating of any negative changes such as the drop in your disposable income.

Is the inheritance just in your husband's name? If so then it really should just go into his trust deed, not yours.

Hi no.1mum

Can you tell us what your husbands level of debt was?

Has the £10K been left to your husband in a will or has it been gifted? If it has been gifted it may be musch more beneficial for the third party (your husbands relative) to use the £10K to make an offer to your trustee buy out your husbands PTD.

Poorboy

Also, I am in agreement with the experts above. With your level of income bankruptcy would appear to have been a more suitable option. You would have been discharged in 1 year, and although you generally have to pay into a bankruptcy for 3 years, you are unlikely to have to make any contribution towards it due to your only income being tax credits.

As a result, your husbands contributions to his PTD could have effectively doubled and he may only have required a 3 year PTD, as opposed to the 5 year you both currently have.

Perhaps some of the experts could advise if it is too late for you to look at the bankruptcy option.

Poorboy

It's not too late Poorboy. It would require caution about any equity in the property, and would also need the co-operation of the trustee for it to be possible.

the money was left in a will to my husband only so it really only affects his trustdeed.when we took out our trustdeeds we were scared of the stigma of bancrupcy and hence took the 5 yr trust deed thinking it was the only option.we didnt know we could have had different debt soloutions.my husband didnt want his job or my future prospects affected.we have already had our payments reduced at the start of the year from 360-240,due to a drop in income (my husbands salary was made up with bonus incentives which have been reduced.)also we have increased fuel costs the company were good about this i think because our budget was unrealistic at the start to make the trust -deed work on paper.i would be scared to rock the boat so to speak,by asking about bankrupcy as they may revalue our house.before they reduced our payments we struggled and borrowed more money from payday lenders,only a few hundred pounds do you think our trustee will let us pay this with some of the money to make it easier to afford the trustdeed payments?,.i would really like to try and make a go of the trustdeeds but would hope to get my husbands term reduced from 5yrs to3yrs what would be the best way to approach this with my trustee,(level of debt was £33000 incuded joint loan).

Hello no.1mum.

It's always a shame to hear about trust deeds being set up with unrealistic budgets. I think that has to be one of the most common reasons for problems to arise later. A trust deed that relies on non-guaranteed bonus income will also always be vulnerable.

I think perhaps someone may have been trying to help you by allowing you to enter a trust deed funded by your husbands income. Normally all of his spare income would go to his trust deed. That may have enabled him to enter a trust deed on more standard terms but would also have meant you might have had to consider bankruptcy for yourself.

I'm afraid I don't think you'll be allowed to use the inheritance to repay new debts. I also think it's probably unrealistic to expect the term of your husbands trust deed to be reduced unless a third party offers a lump sum to compensate perhaps. I'm sorry I cannot be more positive.

hi anual report arrived today and says they are extending my td by 24 mnth that takes it to 7 yrs,my husbands dosnt seem to be extended dont understand whats going on td company said would call back to explain and next week.long week of waiting i expect.i think i might need to relook at other options any suggestions would be welcome?.

Hi no.1mum.

At this stage I think it's worth waiting until next week so that you have the opportunity to discuss this with your trust deed firm.

Understanding the background may be relevant to any decisions you contemplate thereafter.