Consumer Debt Solutions UK

SINGLE NURSE - client has been living with her partner for three years. She is the main bread winner as her partner has been unemployed. She has borrowed money to help pay debts which her partner owed to various people including the Inland Revenue. She has also used credit cards to supplement their income, robbing Peter to pay Paul. Her personal unsecured debt has risen to over £50,000 including 2 unsecured loans and 5 credit cards with repayments of over £900/mth

Client’s problem came to a head when the hospital changed the agency it worked with and she was forced to take a reduced hourly rate. She therefore lost up to £500-£600/mth take home income and could no longer make the monthly repayments to her creditors.

After analysis of her case, Thomas Charles confirmed that the client could afford to repay a maximum of £400/mth towards her debt. She is living in rented accommodation with her partner and therefore can not raise additional money from a mortgage. An IVA based on payments of £400/mth for 60 months was agreed with creditors. Creditors will freeze all further interest and charges and accept a share of the total £24,000 after which any remaining debt will be written off.

RECENT GRADUATE - client was studying a 4 year degree course in Computer Science. During the holiday periods, he worked as a Web Site designer for a local software firm for which he was paid up to £1500/mth. He felt this income was safe. His employer told him that there would always be work in the holiday periods if he wanted it and there would be a permanent job after graduation. On the back of this expectation, the client funded a car on HP and various credit cards.

Unfortunately, in February 02 (the year of his graduation), the employer hit hard times and was no longer able to offer employment after graduation. This left the client with credit card and HP debt which he was unable to repay. At first, he felt that it would not be a problem to find alternative employment. He therefore took an additional unsecured loan to cover the credit repayments until he completed his course. By the summer of 2002, he had c£38,000 of personal debt requiring monthly repayments of £550.

After graduation, the client found it difficult to find work. He eventually secured full time employment in Jan 03. However, this was at a lower salary than he was expecting. By this time, his debt problem was spiralling out of control as he tried to maintain payments by taking cash from one card to pay another (robbing Peter to pay Paul). Thomas Charles confirmed that the client could afford to pay £300/mth into an IVA with his creditors. This has now been agreed with them giving him the opportunity to get back on his feet and concentrate on improving his employment prospects rather than just worrying about debt.

POLICE OFFICER - client has worked for the police force for 15 years. He is married with two dependant teenage children and lives in police accommodation. His wife has always worked part time. Client was used to supplementing the household income with credit cards. He had also taken a personal loan to carry out home improvement.

In the summer of 2001, client decided to try and get his borrowing under control and took an additional £15,000 consolidation loan. However, as often happens, different household expenses came up and the balances on credit cards started to creep up once again. He now had two loans and card payments to keep up totalling debts of c£45,000. Making the payments was a struggle, but with extra overtime, it was manageable.

In September 2002, client became ill and although able to keep working, was advised that he should not carry out further overtime. He realised that he would no longer be able to maintain his debt repayments. He therefore approached a Debt Management Company who proposed an Informal Debt Management programme reducing his monthly payments down to a manageable £500/mth. He maintained these payments for 6 months paying £3000 back to his creditors. However, by March 03, he realised that the interest and late payment charges on his cards had not been frozen. In fact despite his payments, his total outstanding balance has actually increased! He realised that if he continued with this course of action, he would never repay his debt.

Thomas Charles has been able to introduce the client to the IVA solution. He has been able to offer his creditors a settlement of £30,000 payable over 5 years at £500/mth. The protection of the IVA means that interest and charges are now frozen and a real solution with fixed end date is in place. As important, although formal and legally binding, the IVA solution is a private agreement so future career prospects within the police force are not effected.

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