Lucy Story

Debt Arrangement Scheme

The Scenario

Lucy owns her own flat which her parents helped with the deposit. She has lived there for 5 years and decorated and furnished her home to a very high standard.

She also took out a personal loan to top up her income which allowed her to go on foreign holidays and buy a car.

Life was good until COVID 19 arrived when she was initially placed on furlough and then made redundant. All of a sudden her world collapsed and she couldn’t meet her ongoing monthly payments.

The interest free credit changed to interest being applied as she missed some payments. She couldn’t pay her mortgage or the credit cards. She was allowed a payment holiday but the debt was increasing and she was not sleeping with worry.

What we did

We helped her put a breathing space in place (6 months to come up with a plan) that gave her peace of mind that nobody would raise any action against her.

After 3 months Lucy managed to get a new job but the pay was a lot lower than she had previously.

She could now pay some of her debt but not it all.

The Solution – Debt Arrangement Scheme

We looked at various options with Lucy including reducing her debt and a possible remortgage. We got a value on her flat and she could not believe it had increased in value by £30k compared to when she bought it 5 years ago. Her total debt was £18,200 and if she sold her flat she could pay this off.

She had worked so hard to get her flat to the way she liked it, she had great neighbours and she could walk to work. Selling it was not an option for her. She could not get a mortgage at a good rate that released enough value.

Instead we were able to sort her debt with a payment of £303 over 5 years via a Debt Arrangement Scheme (DAS) which she was able to pay from her reduced income. This took away all of her worry and her future looked bright.

Debt Arrangement Scheme (DAS)

If you owe	£18,180
You might be paying	£680 per month
You could be paying	£303 per month
This could save you	£377 per month

This example shows a monthly payment saving of £377 per month!

Pro’s

Lucy pays her debt over a longer period of time with no added interest and a reduced monthly payment to suit her budget
Her home is protected and doesn’t need to be sold – she continues to pay her original mortgage
The companies she is due the debt to cannot take action against her
Her debt will be settled in 5 years

Other considerations

Lucy must be able to maintain her DAS payments and not default. A default could lead to it being quashed and interest and charges are then applied.
Lucy’s credit rating will show the DAS and could impact a decision on any future credit
applications.