If you are planning to start a Debt Management Plan (DMP) you will need to complete an income and expenditure statement. This document includes all the details about the money you have coming in and your reasonable monthly living expenses.

Working out your monthly living expenses budget correctly is very important. If you underestimate your expenditure your monthly DMP payment will be set too high and you will struggle to pay it. If you use expenses that are too high your creditors might reject your reduced payment proposals.

An important part of your living expenses budget is the amount you spend on your children each month. We explain what allowances you can add for your children so that your creditors accept this budget.

What living expenses are you allowed for children in your DMP?

One of the key expenditure items that you need to include in your DMP living expenses budget is the one for housekeeping. Within this you need to include the cost of maintaining any dependent children you have.

Generally it is acceptable to include a housekeeping budget of up to c£200 for a single parent c£320 for a couple. Then you should include up to an additional c£80 per dependent child. This budget should be acceptable for all children up until school leaving age or who are in further education and still dependant on you.

BMD Tip: Since this article was written the housekeeping allowances may have increased. You can also include other expenses for your children such as pocket money and money for school trips. Please check our DMP living expenses guide for the most up to date allowances.

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What living expenses are allowed for children no longer in education?

If your children have already left education but they are still living with you then more thought needs to be put into any housekeeping allowance you include for them.

If are you truly paying for the upkeep of children who are no longer in education but still living with you then it is reasonable to include a budget for this. However you also need to consider whether they are contributing to the cost of their upkeep such as paying you rent.

If they are contributing then your creditors should not have a problem with you including a budget towards their housekeeping as the amount that they are paying you should help to offset this additional expenditure.

However if they are not contributing you must expect that any expenditure you include will be more closely scrutinised because the effect of this is that it reduces the disposable income that would otherwise be available to pay towards your debt.

What if your creditors reject your DMP payment proposals? 

If your creditors believe that your children should be contributing something to the household income but they are not then they my not want you to include allowances for them in your living expenses and if you do your reduced payment proposals could be rejected.

Given that a DMP is an informal agreement there is nothing to stop you including additional expenditure in your budget anyway. However you must understand that your creditors will be far less likely to freeze any interest and additional charges if they do not agree with your budget.

Of course there may be a perfectly legitimate reason for grown up children to remain dependent on you without making a contribution to the household income. You should make these reasons clear on your expenditure documents.

Ultimately, if you have children of any age living with you who are in any way dependent on you, you need to make sure that you include an element in your living expenses to cover the associated cost of this. However, if the child is no longer in education, you must be prepared to justify this expenditure.