P for Planning

Few professions know the importance of planning like those in the debt advice industry. Careless plans can all too often spell the difference between manageable and unmanageable debt, as one couple I came into contact with recently can attest to.

The Stuarts had arranged their own DIY debt plans with the courts. At first it really did seem as though they had tied up all the loose ends and made the progression from being heavily indebted to having their finances under control. The Stuarts had used an online form to help them with their makeshift debt plan, and the judge they presented their case to had agreed.

It seemed as though the couple had paid almost all they owed within ten years. Except they had forgotten the interest. They had failed to find out the situation regarding the interest with the judge, so, despite only owing £3,000 left on their original debt, they had ended up accruing almost £54,000.

In the small print, it stated that the creditor could apply interest on debt exceeding £5,000.

Luckily, they eventually turned to the professionals, and I was able to step in and help them formulate a viable debt management plan that accounted for interest.

While the Stuarts thought they were saving money by attempting to DIY, their lack of professional help and planning ultimately ended up costing them £54,000.

Planning can also come into debt solutions in a slightly different way. Another case which was referred to me by my introducer, who is an insolvency practitioner, was the case of Mr William, who had a plan he was determined to stick to.

The client had £128,000 worth of unsecured debt and the house had been transferred into his wife’s name two years ago. If the Williams were to file for bankruptcy, therefore, the house would be considered.

This was not an option for the Williams – they had a plan to keep their house and they were sticking to it. They ended up being referred to me after the introducer convinced them that a DMP was therefore their best option.

Originally, Mrs William was planning to remortgage her house to settle the debt in full with a final settlement down the line after she had been on the plan for a while. She was very reluctant to have her name in the plan at all. Their joint Lloyds account, which linked them financially, was also proving to be a problem because Lloyds had threatened to take money from any other Lloyds’ account, including joint accounts.

After three sittings, I eventually managed to sign them up successfully to a DMP. They were very happy with the debt management plan and even more so with the fact that they could stick to their original plan and keep their house!

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