Common financial statement
Whenever you find yourself in a position where you cannot keep up with your monthly repayments to your creditors and you wish to come to a repayment Agreement it is likely your creditors will require a copy of your financial statement.
Your financial statement provides an overview of what money you have coming in each month and how much you have to pay out. Once your income and expenditure has been worked out, you would generally have a figure left over which would be your available surplus which would be divided between your creditors as a repayment proposal.
The following outlines what information is normally required on your financial statement:
Income & Assets
Salary or wage
Salary or wages means what you and your partner take home each month from your job. This may also include any other income you receive on a monthly basis which comes from work you do each month.
Other Income
Other income would include any other regular amounts you receive each month including Child maintenance, money from lodgers, contributions from non-dependants or any student grants.
Benefits
Information about benefits that you receive on a monthly basis will also be required. This includes Jobseeker’s Allowance, Income support, Working tax credit, Child tax credit, Incapacity benefit, DLA, or housing and council tax benefits.
Pensions
Any state pension, private or work pension or pension credit will also be required.
Asset or Equity
If you own a property, the value of the property would need to be included as well as any secured loans you may have and the outstanding amount left to be paid on the mortgage.
Expenditure
Essential Expenditure
Essential expenditure means money you have to pay out each month on your rent or mortgage, any insurances including building & contents, pension and life insurance.
Essential expenditure also includes your monthly utility bills, TV License, hire purchase debts, childcare costs and any court fines.
Housekeeping
Money you spend on housekeeping each month will include food and toiletries, newspapers and magazines, cigarettes and alcohol, laundry and dry cleaning, clothing and footwear, pet food, nappies and other items you spend pay out for on a monthly basis.
All these items are not necessarily priority payments, but they are required as all the information given in the statement needs to be as precise as possible to ensure everything is included when working out how much money you have left over each month.
Housekeeping will also include money you spend on any health care, vets bills, sports and leisure, school meals and cable or satellite TV. Items such as Satellite TV and sports and leisure may be classed as a luxury item and a creditor may require you put that money towards repaying your debts.
Priority Debts
Priority debts include your monthly rent or mortgage and utility bills such as gas and electric.
Council tax is also a priority debts and any hire purchase Agreement you have where there are payments outstanding.
Hire purchase is included because it means that if you do not keep up your monthly repayments on hire purchase Agreements, you could lose the asset.
Non Priority Debts
Non priority debts are amounts you pay out each month to creditors where there is no risk of you losing any assets if you fail to keep up your repayments. These are classed as unsecured debts.
Once you have worked out your income and expenditure, you can then work out how much you have left over to offer your creditors.
On your financial statement, there is a section where you can put in a figure of how much you believe you can offer your creditors on a monthly basis.
If you do not have a sufficient amount left over, you can offer your creditors a token payment. Token payments generally indicate that you are only offer the minimum of £1 a month as you do not have sufficient funds left over to offer anything more.
Your financial statement will back up any offer you make as your creditors will be able to see a full picture of your income and expenditure. This is why it is important to include everything.
If something is missed off your financial statement and you make an offer of payment which has been accepted, and then you realise you missed off a payment you have to make each month, this will mean your financial statement is wrong and you will have to go through the process with your creditors again.
Call our specialist debt team on 08000 915 004 to find out how we could help you.