step change debt charity income and expenditure form
Do I have to fill out an income and expenditure form?
Many people will automatically fill out an income and expenditure form when requested by the Original Creditor or a Debt Collector. The question is – Is this necessary? It’s always important to understand why you are doing something before you go ahead and... well... do it.
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Do I have to fill out an income and expenditure form
The first thing you need to know is that nothing in the Financial Conduct Authority (FCA) Handbook in section 7.3 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.
They are not allowed to suggest amounts for you to pay towards your debts, that's why. So, the income and expenditure helps them understand what may be affordable for you.
“Well, if the FCA is not saying I need to fill one in, I just won’t,” you might be thinking.
Slow down; it’s not as simple as that, as you’ll find out.
Do I have to fill out an income and expenditure form for the Original Creditor?
When you're experiencing financial difficulty and cannot make the minimum agreed payments towards your debts, the original creditor must work with you to find a resolution per the Financial Conduct Authority Handbook. They must also accept token payments for a reasonable period. However, you must demonstrate that you are in financial shock for this to happen.
If you contact a creditor stating that you are having financial difficulty and can no longer make payments as you agreed, this should be enough to show that you are struggling, in our opinion.
Original creditors are supposed to freeze all interest and other charges when you announce you are in financial shock. 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 how much you can afford to pay them monthly.
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 download and send it to your creditor.
If you are still charged interest and other charges after informing the creditor that you are in financial shock, you may want to file a complaint to have the charges removed. Don’t worry. We have you covered on that, too! You can see how to do that here.
Do I have to fill out an income and expenditure form for a Debt Collector?
Like the original creditor, debt collectors must work with you to set up a repayment plan and accept Token Payments under the Financial Conduct Authority Handbook section 7.3.
The main thing you need to know here, and a key differentiator between debt collectors and original creditors, is that they are not allowed to charge interest or any other charges (for example, late payment charges).
As we already mentioned, nothing in section 7.3. of the Financial Conduct Authority Handbook states that an income and expenditure is required to demonstrate financial difficulty. So, it is your decision whether to fill in the debt collector's income and expenditure or not.
As long as you are paying what you can afford and have communicated this with the debt collector, they should accept your payments for a reasonable amount of time while you’re struggling financially.
Remember to read The Real Debt Guy's final thoughts below!
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.
