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Do I have to fill out an income and expenditure form

The first thing to understand is that the Financial Conduct Authority (FCA) Handbook in section 7.3 doesn’t require someone struggling with debt to fill out an income and expenditure form. You might wonder why creditors and debt collectors ask you to complete one if it is not compulsory.

They are not permitted to suggest amounts for you to pay towards your debts, that's why. Therefore, income and expenditure details help them understand what might be affordable for you. Under the FCA’s rules, if a firm decides to assess your income and expenditure, it must do so objectively and, where possible, provide you with a copy so you can reuse it with other lenders or debt advisers.

You might be thinking, “Well, if the FCA isn't demanding I fill one out, I simply won't.”

Slow down; it’s not as straightforward as that, as you’ll find out.

Why Creditors Push So Hard for Income and Expenditure

From their perspective, a clear income and expenditure form:

• helps them justify freezing interest and charges,
• provides them with evidence if their regulator ever enquires,
• and enables them to demonstrate that any repayment plan is “affordable” under the FCA’s Consumer Duty.

From your side, a proper budget can protect you from agreeing to payments you simply can’t afford – which is where tools like The Real Debt Guy’s Budget Planner come in.

When you're experiencing financial difficulty and cannot meet the minimum agreed payments towards your debts, the original creditor must collaborate with you to find a solution in accordance with the Financial Conduct Authority Handbook. They are also required to accept Token Payments for a reasonable period. However, you must prove that you are in financial shock for this to be applicable.

If you contact a creditor, indicating that you are experiencing financial difficulties and are unable to meet your contractual obligations, this should be sufficient to demonstrate that you are struggling, in our opinion.

Original creditors are expected to freeze all interest and charges when you declare financial hardship. However, some do not act immediately; instead, they send an income and expenditure form and wait for you to complete and return it. They might want to see your completed form to verify your financial difficulties and determine how much you can afford to pay each month.

To ensure that interest and other charges on your account are frozen, we always recommend completing an income and expenditure form for the original creditor and returning it. You don't have to use the creditor's format; for simplicity, you can use our budget planner. Once it's finished, you can easily download and send it to your creditor.

When Completing It for the Original Creditor Can Help You

For original creditors (banks, card providers, lenders), completing an income and expenditure form can:

• support your request for interest and charges to be frozen,
• show clearly that token payments are all you can afford,
• reduce the risk of being pushed into unaffordable arrangements.

The FCA’s own research shows that millions in the UK are struggling to keep up with bills and credit repayments, which is why the regulator expects firms to show forbearance and due consideration when you reach out for help. Having a clear income and expenditure helps to support your case and provides a stronger position if you need to make a complaint later.

Debt collectors, like the original creditor, are required to collaborate with you to establish a repayment plan and accept Token Payments, as outlined in section 7.3 of the Financial Conduct Authority Handbook.

The main point you need to understand, and a key difference between debt collectors and original creditors, is that they are not permitted to charge interest or any other fees (such as late payment charges). As previously mentioned, nothing in section 7.3 of the Financial Conduct Authority Handbook states that submitting an income and expenditure is required to demonstrate financial difficulty. Therefore, it is your choice whether to provide the debt collector with your income and expenditure details or not.

As long as you pay what you can afford and have communicated this to the debt collector, they should accept your payments for a reasonable period while you’re facing financial difficulties.

Your Rights with Debt Collectors and Income & Expenditure

Here’s the key point:

• Debt collectors cannot force you by law to complete their specific income and expenditure form.
• They are also prohibited from adding new interest or charges to regulated consumer credit debts they are collecting, unlike many original creditors.
• If you’re making a fair, affordable payment and you’ve told them you’re in financial difficulty, they should follow FCA rules and treat you fairly.

You can continue using your preferred income and expenditure format, such as The Real Debt Guy’s Budget Planner, to determine what you truly can afford. If a collector requests additional details that feel invasive—like bank statements or medical records—you have the right to decline sharing this private and sensitive information.

Even though it’s not legally compulsory in most cases, an income and expenditure form can be a powerful tool in your hands when used properly.

Benefits of Completing Your Own Income & Expenditure First

Before you agree to anything with a creditor or collector, having your own budget nailed down helps you to:

• see precisely what you can comfortably afford,
• avoid being pressured into over-committing,
• spot areas where you might trim costs without harming essentials,
• stay consistent when different creditors ask you the same questions.

Think of it like this: if you don’t know your own figures, you’re heading into a negotiation blind, while the creditor has all the experience.

Priority Bills vs Non‑Priority Debts

When you’re filling in income and expenditure, always remember:

• Priority bills (such as rent, mortgage, council tax, utilities, and court fines) take precedence over consumer debts.
• Only the remaining balance should be allocated to credit cards, loans, catalogues, and similar accounts.

A well-organised income and expenditure form helps you focus on your priority costs and prevents you from giving up essentials just to please a collector.

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.