A client considered his options

The client called our Debt Service. Although he had no priority debts, the client was concerned about an unmanageable amount of non-priority debt.

The Full Picture

This debt had been accumulated over several years when his self-employment had slowed down and become less profitable. The debt was having a dramatic impact on his home life both financially and emotionally.

How We Helped

Our Debt Adviser had an initial chat with the client, explaining the service and how it could help. As this was personal debt, and although he was still trading, the client was told that completing a financial assessment would quantify how far he was from having the affordability to maintain all contractual payments.

Upon the draft completion of a financial assessment, it suggested that the client had £500 surplus per month. The client questioned this as he felt that the finances were tighter in the household and felt that he had forgotten individual strands of expenditure. He decided to re-examine his figures and return with more information.

When the client returned, the additional expenditure meant that he had a monthly deficit of £130 and, as spending was high, the adviser initiated a discussion regarding budgeting.

After a discussion, it became apparent that the client felt his actual affordability lay somewhere in between these two figures and expenditure was revisited. When the expenditure reduced to more reasonable levels, a surplus of £200 was made available.

The financial statement now showed a surplus of around £200 per month which the client felt would be reasonable. He might have more available, but was keen to discuss further with PayPlan in an effort to decide between an Individual Voluntary Arrangement or a Debt Management Plan.

The adviser covered the comparison between IVA and DMP. Explained the formal, legal nature of an IVA and the need for an Independent Practitioner to set one up. Also that his creditors must vote on it and 75% of the value of the creditors who vote must accept the term for it to become binding. The adviser also discussed bank accounts and need to set up a safe bank account, that an IVA would affect to credit rating for six years and that there was a risk of bankruptcy if the IVA failed. On a more positive note, if it reached completion all residual debt would be written off.

The Outcome

The client decided that he would like a discussion with PayPlan to finalise his decision but it was likely that he would go for an IVA and the adviser facilitated the referral. 

For help accessing FREE money and debt advice, including our Debt Service, call 0800 915 4604 (Monday to Friday, 9am to 5pm) or email advice@adviceni.net.