After looking into the options he decided to go for an IVA. The creditors agreed that he only need repay just over half of the whole debt.
The interest was frozen and every month he was able to pay a chunk off the agreed lump sum. It was still tough making the payments, but with the debt going down all the time he could manage it and there was always enough left over to meet his family's needs.
It was agreed that Mr R is to pay £305 per month for 60 months - £18,300 in total. £13,000 will be written off and he will be debt free at the end of the agreement period.
Mr F was made redundant 2 years ago when his employers went bust. He got no payment and was unemployed for 5 months, causing him to borrow on credit cards to replace lost income.
He found new employment only to be laid off again. After a further period unemployment, he attempted to consolidate his debts with a bank loan. His credit card borrowing continued to escalate though and his health suffered due to the financial burden. We negotiated an IVA with creditors and he now pays just £300 per month.
Debts of £34,000 will be wiped clear in five years.
Mr and Mrs K have 3 children under 7, and a total debt of £43,000 spread over 5 credit cards, 2 loans and an overdraft. They have a car on H.P. which is essential to travel to work / pick up kids from school.
They currently pay out £650 per month leaving a growing overdraft. Their outgoings leave them with no money at the end of the month.
They agreed to repayments of £280 per month for 3 years and £450 in years 4 & 5 as the car H.P. ends in 36 months.
They get to keep the car and maintain a Bank account.
In total they will pay back £20,800 over 60 months and become debt free.
Below you will find examples of Debt Management case studies, which are representative of cases One Advice have handled in the past. Names have been altered to protect client privacy.
Mr S is a self-employed builder. He and his wife have two young children and a new baby. They rent their home from a private landlord.
Although Mr S's business was doing well, he and his wife were experiencing considerable financial pressure since the arrival of their third child. As his wife worked part time prior to her pregnancy, they were feeling the loss of a second income.
Mr S has been using credit cards for some time, but was beginning to rely on them more heavily due to not having a second income and using it to pay for his rent and other financial commitments. He was beginning to slip behind on his monthly payments.
We advised Mr S that a debt management programme would provide a perfect solution to his problem. Rather than 9 separate payments totalling £690 per month, we restructured his credit commitments to one single monthly payment of £310.
Mr S now has control over his finances (as opposed to his creditors demanding control!); he no longer has pressure about missing any payment deadlines as they are all paid through this one monthly payment. Additionally, his interest was frozen by the credit companies, meaning that Mr S was reducing his total indebtedness at a much faster rate.
Mrs A is a teacher and owns a house with her husband worth £180,000, with £130,000 outstanding on their mortgage. Their unsecured credit commitments comprise of two loans, four credit cards and a bank overdraft totalling around £30,000.
Although Mrs A had not fallen behind with making payments, she was finding it difficult to manage and recently had to extend her bank overdraft. Her credit card balances were decreasing very slowly as she could only afford to make minimum payments. She had applied for loans at various companies but had been turned down and was not keen to secure a loan on her property or remortgage.
Mrs A contacted us, and on reviewing her finances we discovered that her total income was exceeded by her outgoings. She was committed to payments totalling in excess of £850 per month towards her unsecured creditors. We contacted her credit companies and negotiated reduced payments according to her circumstances. Mrs A agreed to make a single monthly payment of £437, and in addition we were successful in negotiating an interest freeze with her creditors. As well as the lower payment, Mrs A found that her debts were reducing at a faster rate.
Mr W had worked as an IT consultant for many years. Due to circumstances beyond his control, he was made redundant and had to accept a clerical job on a reduced salary.
Mr W immediately discovered that he was unable to meet the demands of his creditors due to his vastly changed circumstances. After meeting his household commitments, he found that his disposable income was less than half of what he was being asked for by his creditors.
After Mr W contacted us, we were able to demonstrate to his creditors that he was genuinely unable to fulfil his financial commitments. We negotiated reduced payments to all of his creditors befitting of his new circumstances. Rather than him paying £467 per month to 7 credit companies, we organised a single payment of £183 per month. We were also able to arrange a freeze in interest on his unsecured debts.
Although it would take longer for him to clear his debts, Mr W was happy that the flexibility of his DMP would enable him to increase the payments to his creditors should he obtain a higher paid job in the future.