Debt Management Examples
Mrs Jones contacted our office last march in need of some friendly advice. At the time she was struggling to keep up with her repayments to all of her different creditors. This was due to her being made redundant and the few months out of work had made her fall behind with the payments and fall into arrears. With the arrears in place, Mrs Jones knew it would be very difficult to catch up with her payments considering she had rent to pay and household bills also.
The debts that Mrs Jones had consisted of:
- 1 loan with Lloyds 7.5k - expected to pay £230 per month
- Credit card with Lloyds with 2.5k - expected minimum payment of £80 per month
- Credit card with Barclays with 2.8k outstanding - minimum payment of £150 per month
- Catalogue with Littlewoods with 1.2k outstanding - minimum payment of £80 per month
- An old mobile phone bill which had been disconnected with a balance of £650 - expected to pay £100 per month
All of her debts totaled to £9,655 with expected monthly outgoings of £640. With her rent and household bill on top, Mrs Jones had more money going out each month than what was actually coming in!
After taking all of her essential outgoings from her income, our advisors established that in fact, Mrs Jones could only afford to pay £200 per month to creditors. Therefore, the best solution for her was a debt management plan. We negotiated with the creditors to freeze all of their interest and charges so that she was just paying back what she owed (rather than all of the 'dead money' she was paying to several interest rates) and we gave her an end date to getting these debts paid off (which was 5yrs if all balances were correct, but was flexible if her circumstances changed at all).
NOW, with a debt management plan in place, Mrs Jones pays £200 per month over 5 years. A £440 saving per month!
This scheme also includes a CS management fee of 17.625%
- Debt management schemes are not legally binding on the creditor
- Rescheduling debts will usually lead to an increase in the total amount to be repaid
- Rescheduling debts may have an adverse effect on the customer's credit rating
- The arrangements may lead to a period in which contractual payments to creditors are not made by the consumer
Or for free, no obligation help and advice freephone 0800 228 9 228.
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