Living expenses guidelines updated for protected trust deeds

22nd October 2010

The monthly living expenditure budgets which creditors are prepared to accept within a trust deed have recently increased. We consider what effect this will have for people struggling with debt problems.

If you are planning to start a protected trust deed you will need to calculate your monthly expenditure budget.

The amount you spend each month will determine how much of your income you need for living and how much is left to fund repayments to creditors via the trust deed.

Getting your expenditure budget right is extremely important. You must make sure you include enough money to ensure that you can afford to live reasonably.

However if you want your creditors to accept your DMP proposal you must also make sure that your expenditures are reasonable from their perspective so that they feel comfortable that you are making the best effort that you can to repay them. This is a process that a debt adviser can help you with.

Increases in allowances

In September 2010 the creditors agreed to increase the expense allowances which they are prepared to accept.

Many expenditure items have been increased by only a few pounds a month. However, the most significant increase is in the area of fuel and parking which has been increased by nearly £40 a month to reflect the recent increases in the cost of petrol.

Another area of change is that creditors have now accepted that tobacco should be included as a line item in a smoker’s expenditure budget.

Justify extra expenditure

You should not agree to an expenditure budget that you simply cannot afford. If you do this you will struggle to make ends meet and be at risk of missing your agreed protected trust deed payments. Effectively you will have replaced one problem with another.

If you believe that you need to spend more than the expenditures allowed in the expenses guide then you should include a larger figure.

A good example of where this might be reasonable is if you need to travel a particularly long way for work and therefore your petrol expenses are higher. Alternatively you may or members of your family might have particular health or dietary requirements which need to be paid for.

Be prepared to justify the increased expenditures and understand that there is a possibility that your creditors will refuse to accept anything which they feel is not reasonable. A good debt adviser or protected trust deed company will help to argue this for you.

Excellent news

Given the recent increases in cost of living essentials such as food and fuel, it is excellent news that creditors have agreed to increase the living expenditure budgets which they are prepared to accept.

This will make things easier for people who are struggling with debts and want to start a protected trust deed.

However, if you are negotiating with your creditors, it is important to understand that you must make every effort to reasonably reduce your expenses wherever possible so as to offer the best return that you can to them. This will make it more likely that your trust deed will receive their support.

Article submitted by: James Falla : www.beatmydebt.com

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