Protected trust deeds: improving the process consultation

10. Use of Discretion, Variation and Failure

10.1 The trustee has the discretion to admit claims of £1,000 or less, or claims submitted that do not exceed 110% of the amount stated by the debtor in the trust deed, without the need for additional verification.

10.2 The trustee must ensure that he/she is provided with copies of payslips (or other supporting evidence) every 12 months. The trustee is required to review the debtor's income and expenditure once in every 12 months, using the agreed income and expenditure calculation model. Where appropriate, and at the request of the trustee, the debtor must verify increases in outgoings by providing documentary evidence. The trustee must ensure that appropriate adjustments are made to the contribution level when the debtor's circumstances change. When hire purchase agreements cease during the term of the PTD the IP should re-examine the debtor's income and expenditure to establish whether disposable income has increased thus allowing the income contribution to be enhanced.

10.3 Where the debtor is employed, the debtor must report any overtime, bonus, commission or similar to the trustee if not included in the original surplus calculation. Disclosure to the trustee will be made within 1 month of receipt and the trustee will in-gather an appropriate amount of the surplus income for the benefit of the trust deed estate. Failure to disclose any such overtime, bonus, commission or similar by the debtor may be considered as a contravention of the PTD obligations and the trustee shall notify the creditors in the next Form 4 return together with proposals for how this is to be rectified.

10.4 A debtor who is subject to redundancy whilst in a PTD must:

• Inform his/her trustee within 1 month of notice of redundancy, regardless of whether he/she has received or is to receive any redundancy payment;
• Inform his/her trustee of the amount of any redundancy payment within 1 month;

When dealing with payments made on redundancy, the trustee should refer to Section 6.22 of the Notes for Guidance for Interim and Permanent Trustees issued by the Accountant in Bankruptcy which can be found at: http://www.AiB.gov.uk/guidance/DAS/nfgpostapril/notesforguidancepart1to7n.

10.5 At the point new employment is obtained the trustee will review the debtor's contributions and at that point there will be an expectation that any remaining redundancy funds will be paid into the PTD, and the debtor's performance in this regard will be reported to creditors.

10.6 Failure to disclose any such entitlement to redundancy payment will be considered as a contravention of the trust deed obligations.

10.7 A debtor will be allowed one payment break during the term of the PTD at the discretion of the trustee. If the payment break is for a period of up to three months or less, the trust deed will be extended for an appropriate period for the missed payments to be recouped, without reference to creditors. Where there is a payment break of longer than 3 months the IP will advise the creditors and period of the PTD may be extended and/or the contribution may be adjusted. At the conclusion of an agreed payment break the trustee shall, if necessary, review the position and notify the creditors as appropriate.

10.8 Where the debtor is unable to make contributions and there are no assets that can be realised or equity to be released, the trustee will review the viability of the continuance of the PTD. The PTD may be ended where it is believed that there is no long term prospect of the debtor making future payments. Where this failure has occurred through no fault of the debtor, the trustee may decide that the debt may be written off, subject to Regulation 19 of the Protected Trust Deed (Scotland) Regulations 2008, as the debtor could be deemed to have met their obligations.