It is important to include ALL household expenditure and financial commitments in your statement. Variable items such as fuel bills should be averaged out over the year.

Creditors may challenge amounts spent on food, fuel, clothing, travel etc. so is there any way that you can reduce these to realistic levels in relation to your circumstances? The cost of running a car may need to be justified against using public transport. Leisure and holiday costs may also be challenged by creditors, along with expenditure on cigarettes, alcohol, lottery, pets etc.

Try and make your expenses less than your income, otherwise your debts will continue to grow. However, do be realistic, as you may have to live on this budget for several years.

On completion of your income and expenditure review you can now finalise your financial statement before sending it to your creditors as part of your negotiations (see STEP 6 and 7).

For free advice call the Consumer Credit Counselling Service on 0800 1381111 or contact Credit Action (www.creditaction.org.uk). This guide does not constitute financial advice.