You may be told to secure a financial statement or fill in an income and expenditure form when you were rejected to extend your credit, or when trying to arrange for payments.
Your creditors will usually let you complete these forms so they will have an idea on your current financial situation. Moreover, your creditors will also see to it that your essential living costs are being met.
What details do I need to incorporate in my income and expenditure form?
Before you input the information that you need to take into account, you may need to identify which section would list down each money you earn on a monthly basis. This includes:
- Earnings from employment or self-employment
- Working Tax Credit or Child Tax Credit
- Universal Credit
- Job Seekers Allowance or JSA
- Income Support
- Housing Benefit
- State pension
- Any money you earn on a regular basis
It’s essential that you cover all sorts of income that you’re getting. Completing this information will give a clear implication to your creditor regarding your current situation.
Your priority bills
Your household bills are considered as a priority that has to be considered on your income and expenditure form. This is because any missing payments can yield severe consequences. For instance, if you haven’t paid your mortgage obligation, you’ll face repossession proceedings from your lender.
Your priority bills cover:
- Rent, mortgage or secured loan payment
- Council Tax or Rates
- Water – excluding for Scotland or Northern Ireland citizens, as water is covered in Council Tax or Rates
- Other fuel, such as oil, or coal
- TV licence
- Service Charge or Ground Rent
- Hire purchases or logbook loans, usually for a car
- County Court Judgments or Decrees
- Magistrates court fines
- Child maintenance or support
- Arrears on any of the bills mentioned above
Your other spending
These costs are still considered necessary yet not significantly as compared to your priority bills.
For instance, if you withdraw your digital TV subscription you may be urged to pay for breaching the contract. However, the digital TV firm wouldn’t be fitted to require the same outcomes as your mortgage lender, if you deserted your mortgage payments. The money willed to pay will be designated towards non-priority debt. Other spending expenses are:
- Car insurance, tax, or breakdown cover
- Buildings and contents insurance
- Life insurance or pension
- Digital television
- Repairs and maintenance
- Repairs and maintenance costs
- Telephone and internet
- Public transport
- Medical or accident insurance
- Household appliances that you’ve rented
- Educational fees
- Union or professional fees
- Church or charity donations
- Union or professional fees
Other living costs
There are essential costs that you are in need daily. Thus, there is a set guideline to ensure that you have an adequate amount set aside to cover these costs. Once you spent too much towards your non-essential costs, your creditors might ask you cut costs these expenses.
Your living costs may include:
- Food expenses for the household
- Clothing and apparel
- Dentists and opticians
- Medicines or prescription
- Newspapers or magazines
- School activities and pocket money
- Petrol and parking costs
Your non-priority debts
Lastly, you will necessitate to note down debts that you owe with the payment you’re proposing to pay towards them.
The cost you offer your creditors depends on the surplus income is you have left after satisfying the essential living costs.
Below are the examples of non-priority debts:
- Cancelled contracts (such as gym memberships, mobiles phones and satellite TV)
- Unsecured loans
- Credit cards
- Store cards
- Payday loans
- Catalogue repayments
- Door to door loans
- Arrears from gas or electric suppliers you’re no longer with
- Arrears from rental properties where you no longer reside
These debts can become priority debts once you are on arrears leading to you obtaining a CCJs if you reside in England and Wales, Decrees in Scotland, and Money Judgment if you reside in Northern Ireland. When this happens, you can still arrange affordable terms with your creditors or lenders.
Your Offer Payment
There may be a part of an income and expenditure form requesting you to propose a proposed payment amount on your debts which are based on the figures indicated. You may have to consider scrutinizing the figures and see if it’s realistic for you. Even if you perceive you’re making a small offer, just indicate it in the form. The bottom line is offering the amount based on what you can afford each month. This means the offer has to be realistic and should be based on your available budget.