What are considered to be reasonable living expenses when applying for Bankruptcy?
Summary: This article aims to shed light on what can be included when calculating reasonable living expenses, as well as what will not be considered.
When filing for bankruptcy, one of the first tasks an individual will face will be to calculate their average monthly expenditure. There are certain expenses that will be taken into consideration, and some may be considered 'luxuries' and therefore will not be taken into account.
Essential and allowed expenditure – a rough guide
- This is often the highest monthly expense. It is important to be aware that where a property is owned, it may need to be sold in order to repay some of the debt owed.
• Monthly utility bills
- This will include essentials such as gas and electricity, as well as water rates.
• Council Tax
- If this is paid annually rather than monthly, it will need to be divided by 12 to establish the monthly expense.
• Food and toiletries
- The amount allowed for an individual is £200 per month. Where there is a couple, it is £300. For each child in the household, this amount would increase by £80. This includes food, toiletries and cleaning products.
• Fuel allowance
- The allowance is usually up to £160, however more may be permitted if it can be justified (for example, if it is for work purposes).
- This can include buildings and contents insurance, or car insurance. If they are paid annually, then the amount must be divided by 12 in order to establish the monthly cost.
• Child Maintenance
- The amount allowed for child maintenance is variable.
• Rented goods
- This could include washing machines, fridge/freezer etc
• Dental and Optical
- There is a limit of £10 for an individual and £15 for a couple. As children are usually treated for free, there is no additional allowance.
- Depending on the number of individuals in the household, this amount will vary. For an individual, there is a limit of £25 per month, a couple are allowed £40 per month and for each child there is an additional £10.
Expenses that would not be considered essential or allowed
• Satellite or Cable TV
- Although in some circumstances, this may be considered acceptable if the monthly amount is reasonable.
• Private Health insurance
• Additional contributions to a pension
- this would include any contribution to a club or association unless it is specifically required by a place of employment
• Charitable donations
• Additional payments to a mortgage