Are Income and Expenditure forms necessary?
Do you need to fill out an income and expenditure form?
A lot of people will automatically fill out an income and expenditure form when requested to by the Original Creditor or a Debt Collector. The question is – Is this actually necessary? It’s always important to understand why you are doing something before you go ahead and... well... do it.
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Are Income and Expenditure forms necessary?
The first thing you need to know is that there is nothing in the Financial Conduct Authority (FCA) Handbook in section 7.3 that states someone struggling with debt must complete an income and expenditure form. So why do creditors and debt collectors ask you to complete one you might ask. Well, they are not allowed to suggest amounts for you to pay towards your debts so the income and expenditure helps give them an understanding of what may be affordable for you.
“Well, if the FCA are not saying I need to fill one in, I just won’t then” you might be thinking. Slow down, it’s not as simple as that as you’re going to find out.
Should I complete an income and expenditure for the Original Creditor?
When you are in financial difficulty and you’re unable to make the minimum agreed payments towards your debts, the Original Creditor must work with you to find a resolution as per the Financial Conduct Authority Handbook. They must also accept token payments for a reasonable period of time. However, in order for this to be the case, you need to demonstrate that you are in financial difficulty.
If you contact a creditor stating that you are in financial difficulty and can no longer make payments as per your agreement, this should be enough to demonstrate you are struggling in our opinion. Original Creditors are supposed to freeze all interest charges and all other charges the minute you announce you are in financial difficulty. Some of them do not do this right away, instead they send an income and expenditure form and wait for you to complete and return it. They may want to see a completed income and expenditure to prove you are struggling and to see how much you can afford to pay them each month.
In order to make sure interest and other charges on your account are frozen, we always recommend you complete an income and expenditure form for the original creditor and send it back. You do not need to complete the creditors own format, you can use our budget planner to create a standard format of your income and expenditure to keep things simple. Once completed you can download and send it to your creditor. This gives the creditor no reason to continue applying charges.
If you are charged interest and other charges after you have informed the creditor that you are in financial difficulty, you may want to raise a complaint to get the charges removed. Don’t worry we have you covered on that too! You can see how to do that here.
Should I complete an income and expenditure for a Debt Collector?
Just like the Original Creditor, Debt Collectors must work with you to set up a repayment plan. They must also accept token payments under the Financial Conduct Authority Handbook section 7.3. The key thing you need to know here and a key differentiator between Debt Collectors and Original Creditors are they are not allowed to charge interest or any other charges (for example late payment charges).
Informing the debt collector that you are in financial difficulty is a demonstration of you being in financial difficulty. As we mentioned before, there is nothing in section 7.3. of the Financial Conduct Authority Handbook that states an income and expenditure is required to demonstrate financial difficulty. Therefore, it is really your decision as to whether you fill in the debt collector income and expenditure or not. As long as you are paying what you can afford and you have communicated this with the debt collector, they should follow section 7.3.5 of the FCA Handbook, which is to accept your payments for a reasonable amount of time whilst you’re struggling financially.
Don't forget to read The Real Debt Guy's final thoughts below!
The information in this article is considered to be true and correct at the date of publication.
