What expenditure can be put down in a statement of affairs

I am often asked what expenditure can be included in a statements of affairs. Quite rightly someone going bankrupt wants to be able to include in their list of outgoings everything that they spend each month. Actually this is also very important because the Official Receiver is entitled to take any money that is deemed as surplus to an individual’s requirement for the benefit of creditors.

The Official Receiver has the power to agree an income payments agreement or ask the court to make an income payments order.

The Insolvency Services guidance to its own staff in its technical manual states that  when making an assessment of the outgoings claimed as essential by the bankrupt, the official receiver should always consider each case on its own merits. An assessment should be made as to whether the outgoings are realistic, relevant and appropriate to the bankrupt’s circumstances and whether outgoings included are sufficient to provide for the reasonable domestic needs of the bankrupt and his/her family.

It goes on to say that any expenditure included in the bankrupt’s statement which appears to be non-essential or included simply to prevent any surplus becoming available should be closely questioned,  e.g. weekly launderette costs are included but the bankrupt has use of a washing machine at home.  Particular care should be taken where the bankrupt has been assisted in preparing his/her statement by a commercial organisation, as a set of pro-forma outgoings may have been included which are not expenses actually incurred by the bankrupt on a day-to-day basis.

This is why when I help a client complete their statement of affairs, I dig down into what is really spent in the family home each week. The completion of this form is very important and it could be the difference between making no payments or thousands of pounds in contribution over 36 months.

As the bankrupt you are entitled to argue that the continued payment of certain expenditure items is required, above that considered reasonable by the official receiver to meet the reasonable domestic needs of you and your family.  If you persist in your argument, the official receiver should ask for further information detailing the extenuating circumstances justifying why you consider this an essential expenditure.  The Official receiver then has access to a manual and case law which helps him decide of your expenditure is reasonable for your needs and those of your family.
I have often found that with a good argument and a no back down attitude it is often possible to get the Official Receiver to back down. Getting advice on the expenditure that can be claimed on a statement of affairs can be the best advice you take in relation to going bankrupt.