Jean and Alex are a middle-aged couple with 3 teenage children living in their home they rent from the local council. Both of them are working and all 3 children are still at school. Alex is a shift worker for a major company and Jean is a part time catering assistant. They have managed well over the past few years as Alex’s job has paid on average £100 per week extra in overtime. Without realising it, they have taken this for granted and become dependant on it. Jean and Alex between them have a variety of credit cards, a joint overdraft of £600, an HP agreement on Alex’s car and Jean has 2 catalogue accounts. Repayment for these has never been a problem with Alex’s overtime.
Unfortunately, at the beginning of the year, Alex’s employer introduced an over-time ban due to cost cutting. Alex suddenly found that he was loosing £400/mth in his take home pay. Alex and Jean therefore began to struggle to maintain both their normal family living expenses and the monthly repayments towards their debts. Before they know it they started to falling behind on their accounts. Their first reaction was to take a consolidation loan to try and reduce their monthly payments. They borrowed £8000 from the bank and managed to pay off some but not all of their accounts. Alex did not worry about this as he felt that the overtime at work would be re-instated. Unfortunately this did not happen. This meant that Alex and Jean continued to struggle to pay their loan and the card balances that they had not repaid. In addition, to supplement their income, they continued to use their credit cards. Alex also took up the offer of an additional card which was sent to him through the post. Before long, they were in a situation that the card balances and overdraft were at the same level as before they had taken their consolidation loan.
Alex and Jean found themselves in a cycle of debt which is not uncommon. Things seemed to be getting worse and worse with no light at the end of the tunnel. The problem got so bad that they knew that they had to do something. That was when they learned about the Individual Voluntary Arrangement solution. Now they have an agreement with their creditors based on what they can afford and their debt will be settled within five years.
(all names are fictitious)