Budgeting

An income and expenditure form (I&E) or financial statement can be useful both to assess your situation for the purpose of managing your own finances, and to negotiate with creditors.
Financial statement
Although only a court can order you to submit an I&E form, it can be useful, when dealing with creditors informally, to submit an I&E form or financial statement when it can help you back up your offer, see examples below.
  • Budgetto accompany a repayment offer
  • to help you get your creditor(s) to freeze interest and charges
  • to get your creditor(s) to accept token payments
  • to back up a request to get your debt written off based on your circumstances
  • to ask your creditors(s) to hold off action against you for a period of time
  • to request a payment holiday
  • to set up a debt management plan (DMP) through a third party
  • to negotiate with priority creditors.
Statement of means
If you have been taken to court, you will need to submit a statement of means to the court to back up your repayment offer or if you need to request a variation of a court order. You will need a statement of means in the cases listed below.
  • to arrange a monthly installment to pay off a CCJ
  • to request an installment order or a variation of an installment order for a CCJ
  • IPOs/IPAs in bankruptcy
  • repossession hearings
  • arranging payment of court fines
  • charity and grant applications
  • negotiating maintenance and Child Support Agency payments.
When preparing your financial statement, you should always make sure you allow enough for your day to day expenses as well as for possible emergencies. Do not leave yourself short.
Income to be included
income

  • Net earnings from employment
  • Net earnings from self-employment
  • Maintenance payments
  • Investment income
  • Pensions
  • Contributions from other household members

If income is variable, it should be averaged for a representative period. Only regular sources of income should be included as payments should be sustainable in the medium- to long-term.

Couples and other household members

joint debtAlthough creditors may expect income and debts of a couple to be dealt with together, there is no legal basis for this unless the debts are joint debts.  If all debts are sole debts or joint debts incurred with a previous partner, the other partner may not be willing to contribute from their income.

If both partners have a number of debts or, despite them being sole debts, they have been incurred in the course of living together and/or running the house together (i.e. each partner having their own credit cards and using them to make purchases for the home and family), it may be more convenient to deal with the couple’s debts together.

If there is jointly owned property it’s important to consider the possibility of a restriction being recorded against the property as a result of a judgment against one of the owners.

The trigger figures

Trigger FiguresThe trigger figures are meant to set reasonable levels of monthly expenditure depending on the people who live in your household.  The trigger figures are calculated using research from the Government’s Living Costs and Food Survey which is based on a random sample of lower-income UK households produced by the Office for National Statistics. They are updated annually and cover telephone, travel, housekeeping and ‘other’ costs. Outgoings such as rent and mortgage payments do not have a trigger figure because these figures are normally outside the household’s control.

If the trigger figures are not exceeded, there is no need to explain the level of a debtor’s expenditure to creditors. If they are exceeded, it may be necessary to explain why certain items are particularly high.

The trigger figures are not published, they are only available to licensed advisors.
Living expenses guide
Approximate monthly allowance
Single person Couple Additional per child
Housekeeping £210 £335 £80 Includes food, cleaning products and toiletries.
Home maintenance £65 Amount per household, usually only applicable to homeowners.
Rentals £95 Maximum amount per household if you rent your TV, washing machine, etc.
Cloothing and footwear £30 £50 £18
Dental and optical £12 £24 £0
Prescriptions Variable Variable £0 Depending on your prescriptions (NHS)
Hobbies, sports and entertainment £20 £25 £10
Meals at work or school £33 £66 £45
Haircare £10 £20 £5
Pet food and insurance £30 Per household, more if more than one pet in household.
Telephone £55 £70 £5 Includes landline, mobile and internet.
TV subscription (cable/satellite) £25 Maximum per household.
TV license £13
School trips £5
Children’s pocket money £11
Road tax £22 Per car.
Car maintenance and repairs £30 Maximum per car unless justified.
Petrol £195 Maximum unless justified
Dry cleaning £30
Newspapers and magazines £20
Emergencies and sundries £20 £25 £10

In addition to the above, the following items have to be recorded in full in your expenditure form:

  • Rent or mortgage and any linked endowment policy if applicable

  • Home insurance

  • Council tax

  • Utilities (electricity and gas)

  • Water and wastewater

The following items are to be recorded only where applicable:

    [intense_icon_list_item skin=”default” type=”arrow-circle-o-right” color=”#00c41a” rtl=”0″]Hire purchase repayments

    [intense_icon_list_item skin=”default” type=”arrow-circle-o-right” color=”#00c41a” rtl=”0″]Car insurance

    [intense_icon_list_item skin=”default” type=”arrow-circle-o-right” color=”#00c41a” rtl=”0″]Public transport

    [intense_icon_list_item skin=”default” type=”arrow-circle-o-right” color=”#00c41a” rtl=”0″]Pension (do not include any contributions deducted from your wages, as that would be taken into account when stating your take home pay)

    [intense_icon_list_item skin=”default” type=”arrow-circle-o-right” color=”#00c41a” rtl=”0″]Childcare

    [intense_icon_list_item skin=”default” type=”arrow-circle-o-right” color=”#00c41a” rtl=”0″]Travel to school

    [intense_icon_list_item skin=”default” type=”arrow-circle-o-right” color=”#00c41a” rtl=”0″]Maintenance payments

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Online budgeting tool

A good online budgeting tool can be found on this website. There is no need to register or submit any information to them, you can save your completed I&E form in Word format.