Suffered a drop in income? Behind with the mortgage? Bank threatening repossession? Servicing unsecured debts from several creditors? You are not alone. Increasing numbers of people have found themselves in this situation over recent times with the continuing credit crunch. While there are several well documented options available to resolve this situation (debt consolidation, debt management, IVA etc) it is worth noting that a debt management plan can be short term and flexible with an option to step away from it when income returns.
Case Study: Self-employed and working in the building industry John experienced a drop in income as work dried up. Like most of us, while enjoying a steady income, he took out a mortgage and loans to provide a stable and happy home environment for his wife and 3 children. In this he did nothing wrong. It is what we all do in disposing of our income. Unfortunately it is a fact that if income unexpectedly drops then financial hardship can quickly follow. Few of us consider this possibility when times are good.
John found himself 3 months in arrears with his mortgage and struggling to find £800-£900 per month to service £25,000 of unsecured loans. The bank was unsympathetic and was threatening to repossess his house. John naturally wished to protect his home and family. He did not consider bankruptcy an option. Nor did he wish to enter into a 5-year IVA. After seeking advice from Moneysolve he embarked on a flexible debt management plan with an option to leave the plan should his income return to normal. The short term nature of the plan enabled John to benefit from reduced fees and his monthly outgoings were reduced by £300. After 7 months, as anticipated, his income increased and he left the debt management plan.