Statement of means

A statement of means provides both the creditor and the court with information about your financial circumstances. A statement of means is required to back up a repayment offer made at the time of judgment or to apply to suspend a warrant or vary the terms of an order.
What is a statement of means?

financial statementA statement of means should reflect your true financial circumstances and show how much you can afford to pay every month towards a judgment debt. Although the principle is very similar, a statement of means is different from an income and expenditure sheet, financial statement, budget sheet or statement of affairs used to calculate repayments into debt management plans (DMPs) or to make monthly offers to individual creditors. A statement of means has to be submitted to, and sanctioned by, a court, with regards to a judgment debt. Statements submitted directly to creditors or DMP providers to back-up repayments for non-judgment debts are used to reach an agreement, which is informal in nature, with creditors who have not obtained a court order.

The tools used to prepare a financial statement can be used as the basis for a statement of means, see budgeting.

A statement of means is required in the following cases:

  • When making an admission in response to a claim (form N9A);

  • When applying for a variation of the terms of a judgment or a suspension of a warrant (form N245);

  • When requested by a court in connection with a judgment debt.

The form - personal details and employment

Completing the form

1. Personal details

This section is self-explanatory. However, if the judgment debt is in joint names, a separate form should be submitted for each debtor and it should be noted that a joint offer is made.

2. Dependants

Provide information about each child as well as adult dependants under other dependants. A partner living in the household should be included as a dependant even if he/she has his/her own income. The presence of one or more adult dependants may affect the repayment levels.

3. Employment

Note that this section refers to employment status rather than amounts, income is a section of its own. Details of tax and national insurance arrears are only relevant to self-employed people.

The form - Bank accounts and property

4. Bank accounts and savings

Savings amounts may be taken into account to establish the ability to make a lump sum payment. The courts will normally ignore the following:

  • Amounts lower than one-and-a-half times the debtor’s monthly income; or

  • Amounts lower than seven times the debtor’s weekly income; and/or

  • Amounts required to pay a priority debt. These include: mortgage or rent, utility bills, council tax, magistrate court fines, tax debts and maintenance payments. See priority debts.

If the money is required for priority debts, this should be clearly indicated. For joint bank accounts, only the debtor’s share should be indicated.

5. Residence/property

This section is self-explanatory. When a debtor owns his/her home, the creditor could secure the debt by applying for a charging order on the property, provided the debt is over the threshold (currently £1,000).

The form - income details

6. Income

This section should reflect your long-term position.

    Wages payslip

  • Take home pay – salary and other earnings from employment. Use take home pay figures net of tax and national insurance contributions. If your income varies, for example, due to a variable number of hours worked, overtime, commission, bonus, etc.,  the figure should be a realistic average. Only regular sources of income should be taken into account, as the offer must be sustainable in the long-term.

  • Take home pay – income from self-employment. This should be net of taxes and contributions and an average of what you normally earn.

  • Income support, child benefit and other state benefits. Benefits should be included even when they are meant to cover a specific item of expenditure. For example, if you receive housing benefit, this is likely to cover most or all of your rent, which would be listed as an expenditure item, however, you don’t need to include council tax reduction as long as you only list the reduced amount of tax you actually have to pay under expenditure.

  • Pensions. State and occupational pensions should be listed.

  • Contributions from other household members. These include from your partner and any other adults living at home.

  • Other income includes things like:

  • Maintenance and child support payments.

  • Income from savings and investments.

  • Disability allowances are normally disregarded as sources of income, however, they should still be included in any forms submitted to a court.

The form - expenses and debts

spreadsheet

7. Expenses

It is important to take everything into account; it can be easy to forget to include certain things. To avoid that, it is advisable to prepare a budget sheet prior to starting work on the statement of means. see budgeting. Regular payments to judgment and non-judgment creditors should not be listed here as there special headings for them.

Regular priority payments such as rent or mortgage, utility bills, council tax, maintenance payments, etc. should be listed here and not under Priority debts, which refers only to the arrears.

This section lacks many categories of expenditure which should be included under the heading ‘others’, for example, telephone/mobile phone/broadband/data plans, insurance, childcare costs, etc.

You may need to attach a covering letter to detail what ‘other items of expenditure are and to explain some which may be unusually high. For example, a London commuter would have much higher travel expenses than a local commuter, and this fact should be explained. Any expenditure arising from things like special treatments required for specific conditions should also be detailed.

8. Priority debts

This section refers only to those priority payments where you are in arrears rather than regular payments you make. The courts will normally expect the arrears of most debts to be paid in three months, except for mortgage arrears and HP which can be spread over one or two years. Business debts such as VAT and income tax should also be included here.

9. Court orders

This area is for previous judgment debts and administration orders excluding the current order. Do not include priority debts or non-judgment debts here, however, payments made into a Tomlin order can be considered court orders.

10. Credit debts

List payments to creditors for non-judgment debts such as credit cards, loans and DMP payments. You may need to attach an additional sheet to detail all of them.

11. Offer of payment

An offer of payment should be made here, depending on the available income.

  • If the statement shows no available income, a nominal or token offer of, say, 50p or £1 should be made.

  • If the statement shows available income, an offer would be made on a pro-rata basis.

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Always deal with priority debts first. If funds are limited, non-priority creditors can wait!
If you can't afford your CCJ repayments, you need to apply for a variation to avoid enforcement action.
See variations.

Reference