D for Director

One of the most common reasons people come to me for debt advice is because they have lost their job, taken a pay cut or reduced their hours. Change in job circumstance is a key reason for increased indebtedness. Sometimes, however, it is people’s desperation to hold onto their job or their business that actually causes their debt.

This was certainly the case for the largest amount of debt I have seen with one individual customer. Frank Smith was a company director who was desperate to keep his business going. As a result, he had accrued half a million pounds of debt – all racked up on his credit card. He was mortgaged up to the hilt, with two properties he had to pay for – the house which his ex-wife and kids lived in and the flat he shared with his new partner. Luckily, unlike some of the debtors I’ve met with, his family was fully aware of the situation.

He was adamant that he would be able to get his life in order and start a new, profitable business. For this reason, Frank refused to go bankrupt. He started another company which he was convinced would be profitable.

Frank has now been on a Debt Management Plan for five years so far. He is only paying between £500 and £600 per month because, despite his hopes, his business has not yet become as profitable as he once expected. He may be able to enter an IVA in the future, or possibly offer a full and final settlement if he can find a sufficient lump sum of cash. Frank is now on a DMP for the foreseeable future but he has the security of being on a steady and even keel, he has been able to keep his houses, and he remains company director of his own business.