Before you list all the things you need to account for, you need to know which ones are more important than others, and why. Let’s take a look at the sections you’re likely to find in a typical income and expenditure form.
This section is where you would list any money you receive on a regular basis. This includes:
- Income from employment or self employment
- Working / Child Tax Credit
- Universal Credit
- Jobseeker's Allowance
- Income Support
- Housing Benefit
- Any pension payments you receive
- Rent or board you receive
- Any other money you receive on a regular basis, such as housekeeping from your partner or dependants
It’s important you include all types of income you’re receiving. Doing so means that the creditor you’re dealing with can have an accurate picture of your situation.
Your priority bills
Your household bills are your most important expenses and must be accounted for on your income and expenditure form. Missing payments on priority expenses can have severe consequences. For example, if you don’t pay your mortgage or make several late payments on your mortgage you could eventually face repossession proceedings from your mortgage provider.
Priority bills include:
Your other spending
These expenses are still quite important, but not necessarily to the same degree as your household bills.
For example, if you cancel your digital TV subscription you may need to pay a bill for breaking the contract. However, the digital TV company wouldn’t be able to impose the same consequences as, say, your mortgage provider if you failed to pay your mortgage on time. The amount left to pay would be classed as a non-priority debt, which we’ll explore later.
Other spending includes:
- Car insurance, tax, or breakdown cover
- Digital television or streaming services
- Buildings and contents insurance
- Life insurance or pension
- Telephone and internet
- Public transport
- Repairs and maintenance costs (such as heating cover or boiler insurance)
- Medical or accident insurance
- Household appliances that you’re renting
- Educational fees
- Church or charity donations
- Union or professional fees
- Laundry or dry cleaning costs
- Smoking costs
- Loans from family or friends
Other living costs
These are costs you usually spend money on day to day. A good way to establish your typical spend on living costs is to work out an average based on figures from recent shopping receipts or bank statements.
Living costs include:
- Food costs for you and your family
- Clothing and footwear
- Dentists and opticians
- Sundries and emergencies
- Medicines or prescriptions
- Sports, hobbies and entertainment
- Newspapers or magazines
- School activities and pocket money
- Petrol and parking costs
Be aware that if you’re spending an excessive amount on non-essential living costs, your creditor may ask for more information about your spending, to understand whether it's reasonable.
Your non-priority debts
Finally, you will need to list down the debts you currently owe along with the payment you’re offering to pay towards them.
The amount you offer your creditors is based on how much surplus income is left after you’ve covered your priority household bills, other expenses, and living costs. These are known as your priority debts.
The following items are considered non-priority debts:
- Unsecured loans
- Credit cards
- Store cards
- Payday loans
- Catalogue repayments
- Doorstep loans, from lenders, such as Provident
- Cancelled contracts (such as gym memberships, mobiles phones and satellite TV)
- Arrears from gas or electric providers you’re no longer with
- Arrears from rental properties where you no longer live
Non-priority debts will become priority debts if the creditor is successfully granted a County Court judgment (CCJ) against you by the court. This is known as a decree if you live in Scotland or a money judgment if you live in Northern Ireland. Should this happen, you’re still in a position to negotiate a payment that’s realistic for you.
Your offer of payment
There may be a section on an income and expenditure form asking you to suggest an offer of payment on this debt based on the figures you’ve provided.
Take the time to go through the figures you’ve listed and work out what you can realistically offer. Even if you’re concerned that the offer you’re making is too small, write it down anyway. The important thing is that your offer is reasonable when what you have coming in and going out is taken into account.