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Rossduguid
New Member

3 Posts

Posted - 04 January 2021 :  13:27:36  Show Profile  Reply with Quote
I am at the early stages of setting up a Trust deed.
According to our joint budget my wife and I have approximately 300 left of our basic salary per month (even after removing creditors) with the trust deed payment
I receive a performance based variable quarterly bonus which has always been intrinsic in our calculations
I have read that the trustees may take 100% of this "surplus" income which would make it unaffordable but I have been unable to get any clarity.

Can anyone help?

TDA (Debt Adviser)
Trust Deed Expert



13606 Posts

Posted - 04 January 2021 :  14:58:28  Show Profile  Reply with Quote
Welcome to the trust deed forum Rossduguid.

Am I right in understanding that you have a surplus income of 300 per month between you based upon your basic salary alone?

If that's correct, has this budget been created by an adviser or are these your own figures currently? This is important because certain types of expenditure often get left out or get underestimated (especially with irregular types of expenditure).

If your budget is based upon basic salary only, what types of spending/costs are you relying upon the quarterly bonus income to cover?

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Rossduguid
New Member

3 Posts

Posted - 04 January 2021 :  18:47:34  Show Profile  Reply with Quote
Thank you

The 300 is based on my and my wife's basic salary less our other expenses such as pet,car, house insurance and the PTD payment etc.
The bonus is usually split into 3 and used as part of our income.
I realise I will have to surrender some of it at least but am struggling to get a definitive figure/percentage.

We haven't seen the advisers figure.

R
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TDA (Debt Adviser)
Trust Deed Expert



13606 Posts

Posted - 04 January 2021 :  18:56:47  Show Profile  Reply with Quote
Hi Rossduguid,

Thanks for providing this extra information.

Are you saying that it's this 300 that will be left over to pay for non-bill expenses such as food, petrol etc?

How much are you being asked to pay into your trust deeds?

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TDA (Debt Adviser)
Trust Deed Expert



13606 Posts

Posted - 04 January 2021 :  19:02:06  Show Profile  Reply with Quote
The general answer by the way is that you'll need to pay your full disposable income into your trust deeds.

This would usually be calculated by subtracting your household bills and all of your other reasonable expenses like food/clothing/petrol etc from your reliable level of income (the basic pay).

If you then earn extra (like a non-guaranteed bonus) that would usually all get paid into the trust deed. This is done to be fair to people who don't receive bonuses and therefore cannot benefit from extra income during their trust deeds.

What I'm a bit unclear about (and I think you might also be) is whether this bonus money has already been factored in somehow to the calculation that your adviser is using.

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Kevin Mapstone
Trust Deed Expert



3926 Posts

Posted - 04 January 2021 :  19:12:09  Show Profile  Reply with Quote
I was reading it as the bonus having already been used in the calculation and then potentially also being required to be paid additionally. If so, then this shouldn't happen - whatever way your contribution is being calculated the bonus shouldn't count twice.

Are you and your wife both entering into Trust Deeds, Rossduguid? If not, then it should only be your share of the joint disposable income that is required to be paid in.

I'm not sure if you have signed up to paying a certain amount already, but if not I would encourage you to take your time and get everything clarified by your chosen firm to your satisfaction. It is usualy a good idea to get a second opinion too, as different firms may look at these calculations a little differently. It may be that a fairer/more affordable arrangement than what you are being presented with is possible.

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Rossduguid
New Member

3 Posts

Posted - 04 January 2021 :  19:29:46  Show Profile  Reply with Quote
I haven't seen a physical copy of the advisors figures yet.
I have mentioned that there is a quarterly bonus but no actual figures have been included.

My wifes salary + my basic salary - regular payments (not including creditors who will be included in my PTD) = 300 for food clothing etc/ month
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TDA (Debt Adviser)
Trust Deed Expert



13606 Posts

Posted - 05 January 2021 :  09:20:11  Show Profile  Reply with Quote
Hi Rossduguid,

300 per month to cover all non-bill expenditure doesn't really seem viable or sustainable for most couples.

As Kevin mentioned, it seems important that you get sight of the figures that your adviser has put together.

It's also important to understand how your bonus income will be treated, but it's much more important to be 100% confident that any monthly trust deed payment you sign up for will be sustainable and realistic for a period of at least four years.

This is especially the case if you agree to a payment level that relies upon you continuing to receive non-guaranteed bonus income.

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Swandog
Advanced Contributor

211 Posts

Posted - 05 January 2021 :  11:06:23  Show Profile  Reply with Quote
One of the most important things when it comes to entering into any plan to deal with your debts is that any payment must be affordable and sustainable and a thorough income and expenditure has been completed.

There can be a couple of ways in which a bonus is looked at. Under the legislation for Trust Deeds and Sequestrations all surplus income should be paid over. If it's known at the outset that a bonus is paid every quarter and you can work out an average over the last 12 months then this could be taken into consideration when looking at your average income and expenditure. That would mean that when you receive the bonus it's already been factored into your budget and you wouldn't lose this as a lump sum.

As Kevin has said it's always a good idea to explore your options and also get a second opinion on your circumstances and options.

When you are ready to proceed with a company make sure you get absolutely everything in writing regarding bonuses, income, assets, payments per month etc.
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