Working out your monthly disposable income correctly is one of the most confusing tasks for someone trying to sort out their debt problems.
Whatever debt route you take, somewhere along the way your creditors – the people you owe money to – will want to know exactly how much spare cash you have each month to pay them.
Disposable income is the cash you have left to spend each month over and above day-to-day living costs and priority bills.
To work out disposable income, you need to know what priority bills and living costs you can include in your financial statements.
This is where a debt advice firm comes in handy – they are up-to-date with the latest rules and regulations that lenders and the courts follow to work out disposable income, so they are well-placed to give you straightforward tips on what you can claim – and what you cannot.
The calculation is similar for financial management plans, debt relief orders, IVAs (individual voluntary arrangements) and bankruptcy.
Top of the list of priority bills come rent and mortgage payments, utility bills, council tax and food.
Car costs can be considered as well if you use the vehicle to travel to work – but they may be reduced or cut altogether if other, cheaper transport options are available.
You can also include costs for children, clothing, pets and other reasonable expenses.
Compiling your financial statement to properly reflect your living expenses is important because your creditors will base your monthly repayments on your monthly income less the total.
If you get the figure wrong, you can end up making your debt problems worse.
It’s no good just claiming estimated costs either, you need to evidence the spending with statements and bills to arrive at the correct figures.
Your debt adviser will be aware of the right way to calculate your disposable income and will have a lot of tips and hints from working with lots of other people facing the same problems as you.
—- ENDS —-
Notes to editors:
- Money Debt and Credit is one of the UK’s fastest growing financial solution companies.
- The company was founded in 2006 on the belief that every client has the right to appropriate financial advice. Since then we’ve gone from strength to strength and have helped thousands of people with a variety of financial solutions.
- We offer a range of services including Financial Management Plans, Loans, Mortgages, Full & Final Settlements, Bankruptcy, Investments and Pensions.
- Specialties: IVA s, Financial Management Plans, Loans, Mortgages, Trust Deeds, Full and Final Settlements, Bankruptcy
For more information or debt advice contact:
Money Debt and Credit
45 Clarendon Road, Watford, WD17 1SZ
Tel. 0800 16 999 46
Image: nuttakit