Debt Management Case Studies
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.
Fees: set-up cost £620, monthly fee £54.
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.
Fees: set-up cost £874, monthly fee £77.
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.
Fees: set-up cost £366, monthly fee £35.