B for Bust

One thing that really annoys me is when outsiders assume that the reason someone has been put on a DMP is because they are addicted to spending or that they are unreasonable and just can’t control their budgets. Before spending money (particularly on a credit card), the majority of people calculate beforehand exactly how they’re going to pay it off. They might have just got a bonus at work, or might plan to cut back on their spending for other areas during that month.

If whatever is being purchased is bought with credit, however, there is always the chance that it will not be able to be paid back. No matter how secure your job seems, who knows whether you will still be in it a year from now? No matter how well you and your family seem, who knows if one of you will be taken ill next week and be unable to work for a further six months? All it takes is for one thing to tip the scales, and all of the debts an individual has been balancing suddenly become unmanageable.

One man I met who had experienced this was the owner of a company selling and fitting lighting. His business had always been successful up until the economic crisis. Even then, he and his partner might have been able to weather the storm if they had stuck together, but unfortunately his partner left the business – leaving my client with a lot of debt from personal guarantees to the bank.

The business folded and Jeremy was left with more than £100,000 of debt. He also accrued debts and CCJs after a few months out of work.

I suppose he could have possibly gone bankrupt, but he didn’t want to lose his house. By the time I met with Jeremy he had, thankfully, got a new job – although he was earning only a fraction of his previous salary. After first being reluctant to enter a DMP because of the sheer amount of time he would spend paying off his debts, he realised that it would give him vital breathing space from his creditors.

Jeremy explained to me that his grandfather, who was quite elderly and extremely unwell, would be leaving him an inheritance after he died and his million pound house was sold off. After we discussed it, we realised that, if he entered a DMP for the time being, when the situation changed he might be in a position to offer his creditors a full and final settlement.

Being on a DMP allows him to get on with his job for now and pay a manageable amount of money back to his creditors, and once he comes into some money he can hopefully get his debts cleared forever.

Another woman I helped also went from living a comfortable, well-off lifestyle to experiencing unmanageable debt. She had a great job in the City, so could afford a large house and a mortgage and to send her children to good schools etc.

Because she had such a comfortable lifestyle, she wasn’t afraid to use her credit card, safe in the knowledge that she could easily pay it back.

It wasn’t until a few months after she had lost her job that the circumstances really began to bite. As a single mother, she had a mortgage, school fees and the rest. We put her on a DMP after she eventually found work at her children’s school.

While her salary is significantly less than what she was used to, being on a DMP has allowed her to keep the house and actually spend more time with her kids. Like Jeremy, she one day hopes to be able to afford to do a full and final and clear her debts.

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