Debt Arrangement Scheme Case Studies
Case Study 1: Alison
Alison was a 26 year old single parent who lived with her 3 year old. She worked full time with the local authority as an administrative assistant. She was not a home owner but did own a car valued at £4,500.
Alison’s total debt amounted to £6,500 and consisted of credit cards, store cards, overdrafts and mobile phone bills. Alison was not able to make her contractual minimum payments and so her debts were accruing interest and charges, forcing her deeper into debt.
Alison’s financial statement showed she could only afford £110 per month to pay her debts. However, with a Debt Arrangement Scheme she was able her to repay all her debts in 5 years with a freeze on all interest, fees, penalties and charges. She was also able to keep her car.
Case Study 2: Henry
Henry worked in his local authority as a planning manager. He lived on his own and owed £12,530 on two credit cards and a loan.
He also owned his home which had £30,000 of equity in it and a car which was valued at £5,500. He could afford £200 per month to service his debts, but couldn’t consider any form of insolvency as the equity in his home was worth more than his debts.
He signed a Debt Arrangement Scheme allowing him to repay his debts in just over 5 years.
Case Study 3: Stephen
Stephen ran a business letting out properties and he owned five of them.
He had over £45,000 in equity in all his properties and his family home, which meant he couldn’t go insolvent as he only owed £27,490. He could no longer maintain his contractual payments and was worried that he would struggle to sell any of his properties in the current market.
He decided to enter a Debt Arrangement Scheme paying £240 per month, which would mean it would take him just over 9 years to repay all his debts in full. He also applied a discretionary condition saying that he would sell two of his properties within five years time, when the market had improved and clear his debts.
Case Study 4: Calum
Calum contacted us after his restaurant business started experiencing difficulties. He had been using his personal credit cards to pay for stock and to keep the business running, however things were now turning round and he was beginning to turn a profit from the business.
The only problem was he could no longer maintain the contractual payments to his personal debts.
We drew up a financial statement and it showed he could pay £350 per month to his debts of £39,000. He did not want to go insolvent as it could result in losing his business which was his sole income.
He agreed to enter the Debt Arrangement Scheme paying £350 per month, with the understanding that as business improved, he could increase his payments and pay his debts off sooner.
Case Study 5: Carol
Carol was a Senior Project Manager for a large government agency and earned over £50,000 per year.
She explained she had run up debts of £42,000 after living beyond her means for years, but now as she had a child, she could no longer maintain her contractual payments. She did not own her home and leased her car.
She agreed she could afford to pay £650 per month towards her debts, which would allow her to repay them in full in just over five years.
Case Study 6: Stephen
Stephen was veterinary doctor and ran a small vet practice as a limited company.
He had run up personal debts of £58,500 in credit cards, finance agreements and loans. He did not want to go bankrupt as he would be unable to remain a director in his company and also had £40,000 equity in his home. His car was also worth £10,000.
He agreed he could afford to pay £1,000 per month, meaning he could repay his debts in full within 5 years. He agreed to apply for the Debt Arrangement Scheme.
Case Study 7: Peter
Peter had run his own internet marketing business and also owned ten flats which he let out to tenants. He had always been a sole trader.
He had to terminate his internet business after he got involved in a legal dispute over copyright laws and had run up £15,000 in legal fees. He also had £53,000 in credit cards and loans which he had used to finance his internet marketing business.
His properties had over £70,000 of equity in them and provided him with a good income so he could still afford to pay £1,500 per month to his debts. He did not want to become insolvent as he would lose his properties and the income that went with it, but agreed to pay £1,500 per month to his debts through the Debt Arrangement Scheme. This meant he could repay his debts in just over 3 years.