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In a debt management plan, can I include the cost of children who have left education but are still living with me?

Date: 10 March 2011, Author: James Falla

During the debt management plan application process you will need to give details about your monthly household living expenditure budget. We consider what allowances you can add for children who are no longer in education but continue to live with you.
 
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 the cost of your reasonable monthly living expenses.
 
It is important that you get the figures in these areas correct. They will form the basis of the monthly payment that will be required to make each month towards your debts.
 
If you underestimate your expenditure, your monthly payment will be set at too high a level and you will struggle to pay it and be forced to miss payments or worse still borrow more to supplement your income.
 
Budget for dependent children
 
In terms of your housekeeping expenditure, 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.
 
If your children have already left education but they are still living with you, then more thought needs to be put into any living expenditure allowance you include for them.
 
Children no longer in education
 
If are you truly paying for any living expenses e.g. food of children who are no longer in education but still living with you, then it may well be 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, 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 anything, you must expect that any expenditure you include will be more closely scrutinised.
 
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.

Non dependents
 
If you are still paying for non dependent children, the effect of this is that it reduces the disposable income that would otherwise be available to pay towards your debt.
 
For this reason, if your creditors believe that your children should be contributing something even if this is from benefits but they are not, there may be more reluctance to allow you to include a living expenditure allowance for them.
 
Of course, 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 they are adding to your accounts.
 
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.
 
If they are reasonably dependant on you there should be no problem. However, if not and they are making no contribution to the household income, you may experience more difficulty.

Source: Beat My Debt