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Divorce Makes Credit Repayments Difficult
Initial Debt £30000 Was Paying £800/month
Debt Written off £15000 Now Paying £250/month
Paul works as a construction worker. He is 34 and divorced from his wife last year.
Paul now lives with his parents and pays maintenance of around £400 a month for his 3 children via an order from the CSA.
Paul’s debt problems began shortly after the divorce and found that he was borrowing more and more just to keep up with the minimum payments.
When Paul first contacted us his total unsecured debts were £30,000. These were a mixture of personal loans, store cards and bank overdrafts. Things were complex because a number of the loans were still in joint names with his ex-wife and they were both liable for the repayments.
His income was £1,200 a month after tax and his living expenses (including the CSA payment) around £950 a month. This meant he had £250 a month left over to pay all his creditors. This was nowhere near enough to meet his normal contractual payments but was an affordable amount he felt he could afford.
Paul called our helpline after finding our details online. We carried out a full assessment of his circumstances and discussed all the options that were available to Paul. Paul did consider bankruptcy as he was not aware of the alternatives. He then decided to try for an IVA (Individual Voluntary Arrangement). This was because he felt that although he could no longer make the full payments to his creditors, he wanted to offer them as much as possible and feel that he had done his best to pay back his debts. We then put a proposal together for his creditors outlining his circumstances and the offer he could afford to make. After consideration the majority of his creditors accepted the offer providing payments were maintained over the next five years.
Paul was very pleased to finally have his finances in order and draw a line under what had happened before.
His offer of £250 a month meant a total payment of £15,000 in full and final settlement of his £30,000 debt.
Single Person Living With Parents With Debts Over £50,000
Initial Debt £52,000 Was Paying £700/month
Debt Written off £23,600 Now Paying £290/month
Mr Downing is single and rents from a private landlord and has no children. He earns about £23,000 a year. At 27 years of age, he has amassed debts of around £52,000 over 9 years.
Mr Downing knows his debts are the result of his own irresponsibility and indulgences. Mr Downing contacted us and advised he was finding these payments difficult and was only managing the minimum payments..
Mr Downing agreed to down grade his car to raise £11,000 which also halved his insurance premiums, leaving £41,000 of debt. His creditors accepted an offer of £290 for 60 months, paying back in total £17400.
Couple With Young Children And Car On Hire Purchase
Initial Debt £100,000 Was Paying £1750/month
Debt Written off £49,000 Now Paying £850/month
Steve and Jane have been married for six years and live in a mortgaged property with their baby son. They bought the house recently and there is a small amount of equity. They both have well paid jobs with a combined income of £3500 a month net. However they do have living costs which are high including two cars used for work on finance and child care costs.
When they contacted Debt Plan Direct their total combined debts were over £100,000. After all their living costs, including their mortgage, they had an amount left over each month of £850. Bankruptcy was not an option for either of them as it could affect their employment in the finance sector. They also needed both their vehicles even though the running costs were quite high.
An offer to their creditors via a debt management plan was one option but with the amount that they owed, and assuming that all creditors agreed to freeze interest and charges, this would have taken nearly 10 years to pay back. As an alternative they were both willing to consider an IVA. Proposals were drawn up and accepted for a regular monthly payment of £850 over five years. A total payment of £51,000 for their debts of £100,000. Steve and Jane felt that this was the best solution for them at this time. |
