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How To Get Rid Of Debt Problems Step 2 -- How To Prepare A Financial Statement
Here is how to prepare a financial statement, for the purpose of\rnegotiating reduced payments with your creditors.
Secured/Unsecured debts.
\rBefore we get into the substance of this, let's ensure we are\rclear about the significance of secured debts.
If the debt is secured, there is a risk that the item upon which\rthe debt is secured could be re-possessed, if payments are not\rmaintained. One of the most common forms of secured debt is the\rmortgage -- which also typically represents a very large debt\rand therefore a potentially very large problem.
There are two important points to note concerning\rsecured/unsecured debts and attempting to reduce payments.
1. any creditor who is owed a secured debt has no reason to\raccept reduced payment. The creditor, in nearly all cases, would\rrather re-possess the item upon which the debt is secured
2. The borrower must be aware that, in the case of a secured\rdebt, any change in the agreed payments carries a risk that the\ritem upon which the debt is secured could be re-possessed,\runless the creditor agrees in advance to accept the change.\rThus, in most cases, it is only unsecured debts which offer the\rchance of a potential reduction in payments.
Right, on to the financial statement.
The following are the items you should list, where applicable,\rin order to present your total income and expenditure. You\rshould calculate and enter a monthly figure for these items.
You might like to copy and paste the following items into your \rWord Processor/Spreadsheet/Text Editor for printing out.
INCOME
Wages Salary (after all deductions)........................
Partners or second salary (after all deductions)........... \rBenefits \rUnemployment............................................... \rMaternity..................................................\rSickness/Invalidity........................................ \rChild/One Parent........................................... \rRetirement................................................. \rIncome Support............................................. Family Credit.............................................. \rContributions \rMaintenance................................................ \rLodger/Dependants.......................................... \rTOTAL........................................................
EXPENDITURE \rRent/Mortgage................................................ \rRent/Mortgage Arrears........................................\rSecond Mortgage..............................................\rEndowment/Mortgage Protection................................\rChild Maintenance............................................\rLife/House Insurance.........................................\rCouncil Tax.................................................. \rWater Rates.................................................. \rGas.......................................................... \rElectric..................................................... \rTelephone.................................................... \rClothing..................................................... \rTV Licence/Rental............................................ \rSchool Meals................................................. \rMeals at Work................................................ \rCar Tax/Insurance............................................ \rTravelling Expenses.......................................... \rSpending Money............................................... \rTotal .......................................................
You should ensure that this total expenditure figure is sufficient for your\rneeds, and that no items of expenditure can be considered\rexcessive. Obviously, total expenditure cannot be MORE than\rtotal income.
Your income figures will need to be proven by a copy of a recent\rpayslip.
Look out for How To Get Rid Of Debt Problems Step 3, where we \rlook at 'How To Negotiate Reduced Payments With Creditors'
Rob Hawkins is the owner of \rDebt Consolidation UK. His company Chiltern Debt Management UK has helped more than 50,000 people to get rid of debt problems, and won the coveted 'Debt Counsellor of the Year 2004' award.
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