Guide for firms

Affordability assessment for debt mediation firms

An affordability assessment turns a client's income and essential expenses into a number the practice can use when preparing creditor proposals.

It is not a guarantee that creditors will accept the amount. It is a disciplined way to start from the client's actual position instead of guessing or copying an old spreadsheet.

The basic calculation

At its simplest:

Available amount = reliable income − essential living expenses − agreed non-credit commitments

The practice should define what it includes in each category and apply the same approach across files. If a number is uncertain, record the uncertainty and follow it up.

Start with income

Capture income by source and pay frequency. Depending on the client's situation, this may include:

salary or wages;
commission or overtime;
business or freelance income;
pension or grant income; and
regular household contributions.

Do not treat a once-off payment as monthly income. For irregular income, record the period used and explain how the monthly figure was estimated.

Keep the date and source of the information. A current payslip, bank record, or client declaration may tell a different story from a figure captured six months ago.

Separate essential expenses from everything else

The assessment should show what the client needs to keep the household running. Typical categories include:

housing;
food;
transport;
utilities and communication;
medical costs and insurance;
education and childcare;
support for dependants; and
other regular essentials.

Avoid hiding several different costs in one vague total. Grouped categories make the assessment easier to review and easier to update when something changes.

The practice should use its own written criteria for what counts as essential. DebtDesk does not decide which expenses a mediator must include.

Record commitments that sit outside the proposal

Some commitments may not be part of the creditor proposal but still affect what the client can pay. Record them separately so the practice can explain how the available amount was reached.

Examples might include:

maintenance or support payments;
tax or statutory commitments;
essential arrears;
agreed household contributions; and
other payments the client cannot realistically stop.

Do not remove an expense just to make the proposal look more attractive. An instalment the client cannot maintain will create a problem later.

Check the result before sending proposals

Ask:

Is the income current and reasonably supported?
Are essential expenses complete?
Are irregular costs reflected in the period used?
Are household dependants and contributions recorded?
Are important non-credit commitments included?
Is the available amount realistic after a normal month, not only a good month?
Can another team member reproduce the calculation?

If the answer to the last question is no, the record needs more detail.

Worked example

Suppose a client has:

reliable monthly income of R18,000;
essential living expenses of R12,400; and
other agreed commitments of R1,100.

The amount available before considering creditor proposals is:

R18,000 − R12,400 − R1,100 = R4,500

That R4,500 is a starting point for discussions. It is not automatically the amount every creditor will accept, and it may need to change if the client's information changes.

Keep a history of changes

Affordability is not a once-off exercise. Income, rent, transport, dependants, and medical costs can change.

When the figure changes, record:

what changed;
when it changed;
who updated the record;
which proposals are affected; and
whether creditors need to be contacted again.

Keeping the previous figure visible helps the practice explain why a client's agreed amount is different from the original proposal.

Where spreadsheets become risky

Spreadsheets are useful for testing a calculation. They become harder to manage when:

several staff members use different versions;
formulas are overwritten;
the source date is missing;
a change is made without a note;
the final number is copied into another system; or
the proposal is based on a figure no one can reproduce.

A case-management system should keep the inputs, calculation, date, and resulting proposal connected. If a growing book of clients is making that harder, see our note on scaling a practice beyond spreadsheets.

How DebtDesk supports affordability work

DebtDesk keeps income, expenses, disposable income, and related client information in the case record. The practice can use that record as the starting point for proposals and update it when the client's circumstances change. It fits between client onboarding and creditor negotiation in the wider firm workflow.

DebtDesk does not determine whether a consumer is over-indebted, decide whether debt review is appropriate, or provide legal or financial advice. The mediator remains responsible for the assessment and the decisions that follow it.

Common questions

What is disposable income in debt mediation?

It is the amount left after the practice has accounted for reliable income and the expenses and commitments it considers relevant. The exact categories and method should be defined by the practice and applied consistently.

Should irregular income be included?

It may need to be included, but the practice should record how it was estimated and avoid relying on a once-off payment as if it were guaranteed monthly income.

What if the client has no amount left for creditors?

The mediator should explain that there may be no workable proposal under the current figures. The client may need to consider other options or provide updated information before any proposal is prepared.

Does DebtDesk decide what a client can afford?

No. DebtDesk organises the information and records the calculation. The mediation practice decides which inputs and method it uses and remains responsible for reviewing the result.

For mediation firms

See affordability work on a real file

Book a DebtDesk walkthrough to see how an assessment moves into the proposal stage without leaving the case record.

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