If you are declaring yourself Bankrupt you will need to complete an application form called the bankruptcy statement of affairs (form 6.28). Understanding how to do this correctly is vital.

The information you include in this document will be used by the official receiver to make decisions about your assets and whether or not you can afford to make payments towards your debts once you are bankrupt.

One of the key areas of the form is section 7 “Outgoings”. This is where you record all of your essential living expenses which you need to cover with your income. We find out why it is so important to complete this section of the application correctly and offer some tips and hints about how to do this.

Why is your Bankruptcy living expense budget important?

Before you take your Bankruptcy application to the Court it is absolutely vital that you complete the living expenses budget section of the application form correctly. The official receiver (OR) will use this budget to understand what you and your family need to live on.

Once the budget is agreed the OR will deduct it from your income. Any money which is left over and above what you need to meet your living expenses will usually be taken by the OR to put towards paying your creditors.

If you do not complete your expenses correctly and the figures you use are too low, the OR may ask you to pay more than you can reasonably afford each month. Trying to resolve this situation can take time and is very stressful. It is therefore vital to get your expenses right first time.

BMD Tip: The living expenses budget section (Section 7) of the bankruptcy application form is not very useful as a guide to a sensible living expenses budget. The expenditure items highlighted are not comprehensive and so it is all too easy to miss out vital expenses which could equal hundreds of pounds a month.

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Where can you get Bankruptcy living expenses advice?

When completing your living expenses budget it is important to understand that you can include additional expenses which are not highlighted in section 7 of the form.

All of your additional reasonable expenses can be included in the “other essential payments” box at the bottom of the page. However what types of expenses can be included in this box?

Unfortunately you will not be able to get advice about this from the Court or the Official Receiver. Often by this time it is too late as you have already submitted your application form to the court.

Therefore to help you understand all of the possible living expenses you might want to include you should look at our Bankruptcy living expenses guide. This will give you a clear understanding of all of the different types of expenses an idea of the levels that are acceptable.

What if your living expenses are higher than the guidelines?

Our living expenses guide although comprehensive must be used for guidance only. Each person’s living expenses circumstances are different.

For this reason you may feel that the values you need to include for each of your expenditure items are either lower or higher than the ones suggested in the guide. Where this is the case it is perfectly acceptable to use your own figures.

If you feel that your figures are lower than those suggested it is good practise to include a slightly higher figure to make sure you have flexibility and do not leave yourself with too tight a budget to live on.

If you feel that you need to use higher figures, do not be afraid to do so. However be prepared to justify these and for the possibility that they will be questioned by the official receiver and possibly discounted if the OR feels they are unreasonably high.