Each of our experts have selected real examples of how their particular specialism can assist people resolve their debt concerns in the right circumstances. We hope that these case studies help to demonstrate the theory in real terms. We also trust that they will illustrate how those who make the brave decision to take act on their unmanageable debts can quickly find relief in the situation being brought under control.

IVA Trust Deed Debt Management Plan Remortgage & Secured Loan Bankruptcy

Mr & Mrs D from North-East England were both enjoying successful but demanding careers. Their lives however had drifted apart and spending on credit started to fill the void for both.

As the months and years went on they both found it increasingly difficult to make ends meet. They were both paid well, but more or less immediately after receiving their salaries they found that there was little or no money left for the rest of the month. Virtually their entire salaries were being consumed by their mortgage, utility bills and their credit repayments.

With their monthly salaries gone the credit cards started to be used for necessities like food and petrol rather than the pleasures and luxuries they’d previously enjoyed.

To manage the situation both carefully moved existing balances between credit cards and to new credit cards. Their credit profile was perfect; neither had ever made a single late payment. The total balance of the debts however was growing every single month as the effects of ever increasing interest took hold.

Independently they began to fear that their situation was growing out of control. Despite working hard in good careers neither could see how they might ever repay their debts. Mrs D made a decision that she had to speak with her husband about her situation and fears; with more than £50000 on credit cards she feared that she might end up being responsible for the loss of their family home. For Mrs D this was the point at which her situation could no longer remain a secret. The conversation came as both a shock and a relief to Mr D. He too was extremely worried; going through his paper and online statements several weeks before he was shocked to discover that his personal credit card debt amounted to more than £65000. He’d wanted to speak with his wife but couldn’t find the words or the right moment. At last he was able to be open about his own fears and concerns.

Mr and Mrs D resolved to work together to find a way out of the situation that had arisen. With little equity in their home they knew they could not follow the traditional routes of raising enough money through a remortgage or secured loan to clear all of the debts. After some online research they became interested in the idea of an IVA as it seemed to give them the chance to repay most of their debts within a defined period of time. They contacted an IVA specialist to discuss whether this was an option for them. The result was, at the time, slightly disappointing. As a result of their high salaries they were informed that their creditors were unlikely to accept an IVA as it appeared that all of the debts could be repaid within a reasonable period (not much longer than an IVA). They were advised to speak with Bright Oak to consider whether a Debt Management Plan might be an appropriate alternative for them.

Upon speaking with Bright Oak it became clear that they could afford to repay all of the debts in around seven years due to their significant salaries. This result would come with what seemed a major proviso; to meet that timescale they would rely on the goodwill of their creditors in freezing the interest and charges so that their payments were clearing debt rather than just servicing the interest on the debt. Mr and Mrs D thought carefully about this. They desperately wanted to repay the debts as they felt morally obligated to do so having been lent the money in good faith. However if the interest wasn’t frozen there was little chance of their ever clearing the debt; if this were to happen they might just have to face the prospect of bankruptcy rather than a lifetime of debt.

Bright Oak informed Mr and Mrs D that the vast majority of credit card companies choose to support those who react to their unmanageable debts by putting together sincere and fair repayment proposals. The credit industry acknowledges that due to changes in circumstances and honest mistakes that some borrowers will fall into repayment difficulties. Under the British Banking Association’s Code of Conduct they have mutually and responsibly resolved to treat such cases with sympathy. The credit industry also takes a practical view of such debts; if those who find themselves in such a situation are not given a realistic way out of it then increased numbers of bankruptcies are likely to follow. Bankruptcies help neither those who want to repay their debts nor those who want to collect the monies owed to them.

Mr and Mrs D resolved to give Debt Management a try. There was little to lose; should their creditors fail to support them (by accepting reduced payments and freezing the interest) they would remain free to go bankrupt even though they desperately wanted to avoid that outcome. An exercise was carried out to judge how much they might realistically be able to repay each month. This involved budgetting for all of their needs (such as housing, food, clothing, travel, utilities and also a modest amount for their personal discretionary spend). They completed the paperwork and returned it to Bright Oak. Within a few days their repayment proposal was in the post to their creditors.

The results were not instant. There was a surge of phone calls from the collections departments of their creditors and every day a pile of collection letters seemed to hit the doormat. Mr and Mrs D had however been warned that this might be the initial reaction; after all they had never missed a payment before so the lack of a payment to their creditors would come as a shock to them. They politely informed telephone callers that Bright Oak was acting for them and that they’d like a written response to their Debt Management Proposal before entering into any further discussions on the matter. They collected together the post and sent it to Bright Oak once a week to be dealt with as appropriate.

After three weeks some good news started to arrive. A number of the credit card companies had accepted their proposal and agreed to freeze the interest. Another company had agreed provided that a small increase were made; Mr and Mrs D decided that the small sacrifice from their living budget was worthwhile and agreed to the amount.

The collection phone calls were now few and far between and the volume of post declined sharply. One by one further creditors agreed to support them in their repayment proposal. Mr and Mrs D were delighted by the progress but still worried about what would happen with the remaining few cards for which a response hadn’t come.

After six weeks a couple of credit card companies still hadn’t chosen to respond to the proposal. Bright Oak proactively chased a response from the relevant collections departments and where necessary provided additional documentation and information to support Mr and Mrs D’s case. Once again support was forthcoming. After three months the final creditor that hadn’t yet responded formally accepted the plan.

Mr and Mrs D are now well into their second year. They don’t find it easy living with a fixed budget and without the lifeline of credit, but they do find these limitations a lot easier than living with the stress of ever increasing debts. Strangely the whole worrying situation has brought them closer together again. From a desperate financial mess they have rediscovered honesty with each and are working as a team to manage their finances and to repay their debts. They’re also planning for the future after they become debt free. For the first time in a long time they can realistically look forward to enjoying the fruits of their hard work and professional success.

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