Spare income help

alltaken

If a DRO is granted and energy costs are lower than expected does that mean you have to tell the Insolvency service? If food costs are lower do you have to tell the insolvency service?

I have also been told that household expenditure goes 50/50 if earning the same, if earning different, the higher of the two earners is expected to pay more toward the household bills, is this right?

Household comprises of 4, 2 adults, one adult is a house person with no wages but benefit income only. Other adult has wages and joint party to tax credits, housing benefit etc

Does the adult receiving wages have to contribute more than 50% toward the bills?

I'm baffled more by the DRO application than I am for bankruptcy!

In short, I'm trying to work out what contribution the working adult would have to make to the bills, I assumed 50/50, am I wrong?

National_Debtline

Hi alltaken

alltaken wrote: »

If a DRO is granted and energy costs are lower than expected does that mean you have to tell the Insolvency service? If food costs are lower do you have to tell the insolvency service?


Energy costs declared before the DRO is submitted should be reasonably accurate as you'll have normally been asked for bank statements etc. to confirm your outgoings. As per my response on your separate bankruptcy query, such costs are liable to fluctuate over a 12 month period so it is important to allow for that in your estimates, rather than just plucking a month's expenditure at random.

I have also been told that household expenditure goes 50/50 if earning the same, if earning different, the higher of the two earners is expected to pay more toward the household bills, is this right?


Yes, that is how we would operate if we were handling your application. We would expect your share of household bills to be in proportion to your share of the household's income.

Household comprises of 4, 2 adults, one adult is a house person with no wages but benefit income only. Other adult has wages and joint party to tax credits, housing benefit etc

Does the adult receiving wages have to contribute more than 50% toward the bills?


See above answer

I'm baffled more by the DRO application than I am for bankruptcy!

In short, I'm trying to work out what contribution the working adult would have to make to the bills, I assumed 50/50, am I wrong?


It might be easier if you could either put up a Statement of Affairs here or discuss your budget with the advice agency setting up your DRO.

Dennis
@natdebtline

alltaken

National_Debtline wrote: »

Hi alltaken





Dennis
@natdebtline

Hi Dennis,

Statement of Affairs for household.

Income Monthly:
£605 Statutory Maternity Pay Partner
£390 Working tax credits joint
£486 Child Tax Credit joint
Child benefit £149 Myself only
Total £1630

Outgoings Monthly: (All amounts are household)
Rent £244.70
Housekeeping, Toiletries, Shopping £560
Gas & Electricity £120
Water £40
Telephone, Broadband & Sky TV £56
Mobile Phone £20 Myself
Mobile Phone £20 Partner
Hairdressing £40
Emergencies & Sundries £40
Hobbies and interests £50
Clothing £90
Car servicing £25
£170 Fuel and parking
£13 Road tax
£40 Car insurance
£20 Gifts (Christmas, birthdays)
Total £1548.70

Are the above amounts within CFS trigger figures? These are the amounts spent but things like Gas and Electricity, Water have only recently been budgeted for so the amounts given are an average for our family household as far as I can tell. Is it an issue if the amounts accepted for the DRO are actually less overall for the 12 month DRO period? Or is it not looked at again due to it being an allowed average? I want to be as accurate as possible but don't want to risk the DRO being revoked.

The use of the Car whilst my partner is on Maternity leave and in a potential DRO, is it allowed? Or solely for DRO clients in Work? Thus only budgeted once she returns to work, or projected as a future expense thus included in outgoings currently?

Car insurance, currently paid in full but ordinarily we would budget £40 a month for this expense.

Meals at work would ordinarily be £20. It's not above as we are unsure if it can be listed in a DRO budget if my partner is currently on maternity leave.

Could you also tell me how much surplus income is remaining for my partner based on what you calculate her contribution to the bills above to be? Would it be this surplus income of hers that is used to calculate the DRO eligibility criteria or the total household surplus criteria?

Thank you

DorisTrousers

I'll let Dennis handle your questions more specifically, but if I were preparing your DRO, you would certainly have, for example, a much larger xmas and birthday (gifts) allowance.

I wouldn't worry for a moment, no intermediary would ever put forward a DRO application which they felt was likely to be revoked. Ok, you may win the lottery or something may crop up which is unforeseen in the 12 month period, but other than that you look fine to me.

alltaken

As we seem to have spare on the SOA, what would be an acceptable gift fund each month? Average?

DorisTrousers

You have £206, at first glance, in the CFS expenditure column called "other". With 2 adults and 2 kids, by the looks of it, that figure could be well and truly increased. An intermediary should never "inflate" your expenditure, but if you spend £240 per annum, truly, on gifts, birthdays, christmas etc then I would be very surprised.

My rule of thumb is to ask people to total up what they spent on Xmas, for everyone, mum, dad, siblings, friends as well as immediate family. Then, add 50% on top for things like birthdays, which are generally not as expensive. Do the sums yourself, you may be very surprised at the outcome.

Where are school dinners by the way? School trips? Does anyone smoke? Is the odd pint and/or gin and tonic never taken. Do the kids not get pocket money? What about Tiddles the cat or Fido the dog?

You do look a little bare to me, but then again that may really be a true reflection of your position. Only you can answer that.

National_Debtline

alltaken wrote: »

Hi Dennis,

Statement of Affairs for household.

Income Monthly:
£605 Statutory Maternity Pay Partner
£390 Working tax credits joint
£486 Child Tax Credit joint
Child benefit £149 Myself only
Total £1630

Outgoings Monthly: (All amounts are household)
Rent £244.70
Housekeeping, Toiletries, Shopping £560
Gas & Electricity £120
Water £40
Telephone, Broadband & Sky TV £56
Mobile Phone £20 Myself
Mobile Phone £20 Partner
Hairdressing £40
Emergencies & Sundries £40
Hobbies and interests £50
Clothing £90
Car servicing £25
£170 Fuel and parking
£13 Road tax
£40 Car insurance
£20 Gifts (Christmas, birthdays)
Total £1548.70

Are the above amounts within CFS trigger figures? These are the amounts spent but things like Gas and Electricity, Water have only recently been budgeted for so the amounts given are an average for our family household as far as I can tell. Is it an issue if the amounts accepted for the DRO are actually less overall for the 12 month DRO period? Or is it not looked at again due to it being an allowed average? I want to be as accurate as possible but don't want to risk the DRO being revoked.

The use of the Car whilst my partner is on Maternity leave and in a potential DRO, is it allowed? Or solely for DRO clients in Work? Thus only budgeted once she returns to work, or projected as a future expense thus included in outgoings currently?

Car insurance, currently paid in full but ordinarily we would budget £40 a month for this expense.

Meals at work would ordinarily be £20. It's not above as we are unsure if it can be listed in a DRO budget if my partner is currently on maternity leave.

Could you also tell me how much surplus income is remaining for my partner based on what you calculate her contribution to the bills above to be? Would it be this surplus income of hers that is used to calculate the DRO eligibility criteria or the total household surplus criteria?

Thank you

Hi alltaken


Coming back to you on this one following your prompt on another thread!


It's not for me to tell you what you should budget for gifts etc. I'll just say that the above budget is absolutely fine for the purposes of a DRO application, and would remain so even if you were to allow a little more for the kind of sundry items that Doris refers to.


Dare I say it, I think you may be at risk of overanalysing this. At this stage, your budget doesn't necessarily have to be defined down to the last tenth of a penny. If you feel that a DRO is something you want to do, get on with making an application through one of the advice agencies and there will be time to fine-tune the budget details if needed. All that the adviser needs to be able to see is that you will fit the criteria without any contrivance, and that looks straightforward enough from here. As Doris points out, no intermediary worth their salt would put forward a DRO application that was doomed to fail.


Dennis
@natdebtline