You have been sent this guide because you have contacted us about your debt situation and we have asked you to gather more information. This guide explains what you can do to prepare for your next advice session with us.
Your budget
We know that when you are struggling with debt, writing down your income and outgoings might feel like the last thing you want to do. But filling in your budget is the starting point for dealing with your debts.
You can’t know if a debt solution will work for you without doing a budget. All advice agencies will expect you to do a budget before they can discuss your options. Your creditors will also ask for one. A budget shows you:
- what money you have coming in (your income);
- what money you are spending (your outgoings);
- whether you have enough money to pay your essential bills; and
- what is available, if anything, to pay your debts.
This information helps you to find the best solution to deal with your debts. It also allows you to:
- plan for future spending; and
- protect yourself against the stress that unexpected bills or increased costs can cause.
Our adviser has sent you a blank budget to complete, which covers both your home and your business. We have asked you to complete this budget because you told us that you are a sole trader.
Take a look at what we’ve sent you so you know what kind of information you need to collect. Have this information to hand when you call us back to speak to an adviser.
Gathering information for the budget
Don’t be put off by the amount of information that the budget asks for. You only need details for the sections that apply to you.
Your home
The budget asks you for information about any income that comes into your home and any outgoings needed to cover your essential living costs. To help you get accurate and up-to-date details, take a look at the following, where available.
- Wage slips
- Benefit statements
- Pension-income statements
- Bank statements
- Utility bills (such as gas, electricity and water)
If all your personal income and outgoings go through your bank account, most of the information you need will be in your bank statements.
Make a start today
Gather together the paperwork listed. You don’t need to speak to anyone to do this.
Your business
As you have told us that you are a sole trader, our budget also asks for details about your business income and outgoings. As many people find that their business figures change from month to month, we usually ask you to gather together your last three months’ trading figures (income and outgoings). If you have a separate business bank account, you should be able to find most of this information in your recent business bank statements.
If you told us that all your sole trader income is taxed under the Construction Industry Scheme (CIS), gather together your last three months’ income figures from your CIS work. The figures should include the amounts you received (after the contractor made the CIS deduction for tax). Also list any business outgoings for the same period, such as for travel expenses and materials, that you are not reimbursed for by the contractor.
We will use this information to work out what your business can afford to pay you on average each month.
You may have costs that cover both your home and your business, such as a car you use for both. If so, you will need to split these outgoings between your home and your business. If you are unsure how to split the costs, we can talk to you about ways to do this.
Priority and non-priority debts
Our budget asks you to say which debts are priority and which are non-priority debts. This will depend on your circumstances, what powers a creditor can use to collect the debt and whether the creditor’s actions can affect your ability to continue in business.
Make sure you gather information about all your debts. Our adviser will help you decide which debts are priorities and which are non-priorities.
Getting information about your debts
Our advisers ask you for information about all the debts you owe. This is because the amount you owe and who you owe money to affects which debt solutions are available.
As you are a sole trader, you will need to gather information about any personal and business debts that you owe. This is because sole traders are personally liable for all the business debts too.
Take a look at the latest letters from your creditors for information about how much is owed. If you haven’t kept the letters, or need more up-to-date figures, call your creditors to ask them how much is owed. If you would prefer not to speak to your creditors, send them an email or letter instead.
Debts that you haven’t dealt with for several years
If you haven’t written to a creditor or made a payment towards a particular debt for several years, contact us for advice before you send them an email or a letter.
If you do speak to your creditors, do not agree to a payment arrangement yet. It is important that you only offer what you can afford to pay. You won’t know what this is until you have done your budget.
If you aren’t sure who you owe money to personally, it may help to get a free copy of your credit report. To get a copy of your personal credit report, contact the credit reference agency and fill in an application form. You can usually apply in writing, by phone or online. See the following section Getting your credit reports.
Getting your credit reports
There are three credit reference agencies, and they may each hold different information about you. So, if you aren’t sure what you owe, it is usually best to get a report from all three agencies.
You can get a statutory credit report for free. This will show all the debts that the agency knows about. You can apply for a statutory report online.
- For an Experian report, go to www.experian.co.uk/consumer/statutory-report.html.
- For an Equifax report, go to www.equifax.co.uk/Products/credit/statutory-report.html.
- For a TransUnion report, go to www.transunionstatreport.co.uk/CreditReport/AboutYou.
You may not be able to get another free statutory credit report if you have received one recently. There may be other ways of getting this information for free. Contact us for advice on how to do this. If your creditors are not currently contacting you, you may find that they start to contact you again after you make this request. If you are worried about this, contact us for advice first.
