Illustration of Debt Management
Let us assume a single mother, who has a 2-year-old daughter, leading a normal life in a city. She is a store employee. She works 16 hours a day and claims benefits. During pregnancy and after the birth of the child, a woman ran up debt on her credit card.
Financial Situation the Woman Faced before Using the Debt Management Services
The woman owed money to 3 lenders. The figures showing the debt amount are listed below:
- Barclays – £890, a threshold for payment - £26.70
- NatWest – £4,550, a threshold for payment - £136.50
- Lloyds TSB – £2,130, a threshold for payment - £63.90
Total amount of debts is £7,570. In order to repay debts, £227.10 per month has to be paid. Even paying such a sum, the woman will have to discharge a debt for 14 years. Regretfully, the woman did not have financial possibilities to repay mentioned sum of money per month on an ongoing basis. The woman did not satisfy a payment obligation and therefore had to pay £30 fine at a time. Consequently, her debt has increased significantly.
The Situation during the Implementation of the Debt Management Plan
The woman made an informed decision to use our services. We calculated everything and determined that her disposable income (DI) amounts to £150 per month. According to the plan, the woman has to repay this sum every month. This sum is affordable in accordance with her ability to meet payments.
- £13.80 is repaid to Barclays, based on 12% of total amount of debt
- £32.20 is repaid to Lloyds, based on 28% of total amount of debt
- £69.00 is repaid to NatWest, based on 60% of total amount of debt
- Fees charged amount to £35
One more example is related to a single, 27-year-old man. He has no family and lives alone in a mortgaged property. The man has a job in an engineering firm.
Using credit cards and overdrafts, he was receiving £19,000 per year over the last 5 years. The man did not extend his home, visited expensive resorts or bought luxurious cars.
At the present moment, total amount of debt is equal to £31,000 on 6 credit cards. The man has never missed his monthly payments, however once he was not able to work because of a knee fracture. Therefore, he couldn’t make timely payments.
When the man was on medical leave, he got just bonuses from the employer. As a result, the man’s income has decreased considerably. His repayment ability did not allow him to repay debt timely.
When the man was back to work again, he had overdue payments amounting to £853.00 and did not know how to solve the problem. Moreover, the man had to pay additional charges and interest to the credit card companies. This worsened the situation.
The man decided to use the services of myDebt24. It determined that he could pay a sum of money amounting to £450.00 per month to his lenders.
myDebt24 worked out a reasonable debt management plan for the man. Repayment ability of the man allowed him to pay £450.00 per month due to standing order. myDebt24 helped to stop many interests on the credit cards.
The man got an opportunity to repay debts for 6 years.