The key in establishing a realistic budget is to be completely honest. Be honest about your income and expenses, as well as looking at outgoings. Setting a curated informal debt agreement budget will help you meet your payments.
If someone has never looked at setting budget in the past, doing so can prove quite confronting. People are often shocked to learn how much they are actually spending.
Many people feel like they are always short of funds even though they have a good income. It is only when they stop to look at where each dollar is going when they begin to understand why.
Setting up a budget to present to a credit provider
When setting up a budget to present to a credit provider for a financial relief application, it is important to look at reasonable outgoings. Items in question can take a number of forms. Excessive spending on cigarettes, alcohol or gambling are major culprits.
From a credit providers point of view, it can be a challenge to cooperate with certain borrowers. If you have spent large amounts that could have been controlled, this becomes an issue.
Having said this, a credit provider is still obliged to offer financial relief if a borrower is unable to meet their commitments due to financial hardship. They will be more inclined to offer the maximum level of assistance if they can see that the person is being reasonable.
When setting an informal debt agreement budget, it is all about establishing a realistic surplus. Analyse how much money is left each month after all outgoings and living expenses. This surplus is offered to the persons creditors on a pro rata basis for reduced payment plan.
The amount offered to creditors as ongoing payments may be significantly less than what they asked for. However, as long as the surplus is realistic, the credit provider is under legal obligation to assist.
