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Setting a Budget

The information you amass about your income and liabilities should be used to prepare a personal budget. This will be a document which can be put to good use during your negotiations with creditors and if necessary courts. It may not look very useful (it is more likely to look like an unmitigated disaster story) but even so it can be used effectively to reduce pressure from certain creditors, at least for a while. For this step you will need some help, either from a citizens advice bureau or from a debt advice centre. There are other useful things they can do - we will come to those later. If you have not already done so, make an appointment to see a debt adviser at the CAB or debt advice centre right away. By preparing yourself as described below, only one visit should be necessary, during which all the paperwork can be completed. Debt problems can become rather urgent and it is usually best to avoid any unnecessary delays. You should let the adviser know beforehand that you will be bringing all relevant information so that he or she can be prepared for you. Before you go to see the adviser, you will need to go through your files and find the following documents:- • Your latest statements from the bank, credit/charge card companies, building society (or rent book) or any other accounts. • Your latest council tax bill, inland revenue demands (if self-employed). • Any payslips, unpaid invoices (if self employed), or benefit statements (if unemployed). • All your insurance/endowment/pension/savings plan policies. • The most recent fuel/water/electricity/telephone bills and all bills and statements from retailers with whom you have a credit account. • Any hire purchase and credit agreements. • Paperwork relating to any other commitments or debts e.g. maintenance orders, unpaid fines and so on. The purpose of assembling this information is to enable you to fill out the personal budget statement form which the adviser will concentrate on initially. Go though the documents you have collected and make a note of all relevant figures needed to complete the form, so that you can take this information with you to the meeting. The figures should be collected into four categories: (a) all sources of income including any wages/salary, state benefits and pensions, maintenance payments etc. (b) all current outgoings including mortgages/rent, council tax, water/gas/electricity/telephone charges, insurance/pension premiums, food/clothing, school meals, transport etc (c) all ‘priority’ debts such as mortgage/rent arrears, tax arrears, service charges arrears etc. (d) all non-priority debts such as credit card/hire purchase arrears, bank overdrafts and unsecured debts. In order to take full advantage of your meeting with the adviser, it is advisable at this stage to work out for yourself what the 'bottom line' is going to be, using the figures you have prepared. If there is any amount available for creditors (i.e. if your weekly/monthly income is greater than your weekly/monthly expenses as calculated) then the advisor will be looking to this document as a way of identifying how much you can pay to your various creditors, and of arranging the priority order, i.e. the order in which they should be paid and how much to offer each. This is an exercise worth performing if you actually have an income, but if you do not, the completed form has other uses (described later) so be sure to take the form away from the interview with you or get a good copy. If there is a surplus then you are obviously in a very much better position than otherwise even a little can go a relatively long way towards keeping most creditors on hold.

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