Kevin works as a self-employed joiner while Ruth works part-time as a sales assistant. Kevin’s joinery work is not always steady and he often goes through periods of up to four weeks without work. During these periods the couple rely on the use of credit cards and small family loans to meet their day to day expenses.
When in work Kevin’s wages are upwards of £600 per week, however with Heather also being paid weekly, the Henderson’s budgeting skills are poor and often their money is spent as it comes in with no thought to monthly expenses.
As well as the four credit cards which are used to live day to day in periods of wage shortfalls, Kevin has 2 bank loans; these were taken out to purchase a van for his work and for essential tools of the trade.
The Henderson’s currently have debts of £20,000.
A period of injury left Kevin unable to work, and this was followed by him being unable to work for a further period of four weeks as most building sites were closed over the Christmas and New Year period.
During this period no payments were made to service the credit card debts, instead the Henderson’s choose to pay the minimum amounts on the two loans totaling £9000. However, when into the 3rd month of unemployment across the Christmas period Heather and Kevin found they were unable to service these loans also.
When back in employment Kevin chose to work for a company rather than be self-employed to avoid periods of holidays without pay in the future. However, this type of employment was less well paid than Kevin was used to, and a few months into his new employment the Henderson’s found themselves unable to make anymore than the minimum payments on the two loans and no payments at all to the credit cards.
Upon advice from a friend the Henderson’s made an appointment at their local Citizen’s Advice Bureau for help with their financial problems.
A money advisor worked with the Henderson to address their poor budgeting skills and to find a solution to their debt problem. In working through their income and expenditure it was calculated that jointly the Henderson’s had a surplus income of £350 per month. The discussions led to the decision that it would be advisable for the Henderson’s to enter DAS. This would allow them the time to pay off their debts using their surplus income.
Heather was responsible for half of the two loans and half of two of the smaller credit card debts, in total £5,000 while Kevin was responsible for £15,000 worth of the debt. It was decided to split the joint surplus income resulted in a joint DPP lasting 60 months. The proposed five year DPPs were put to the couples 6 creditors and consent was granted.
Heather and Kevin will be debt free in five years time if they maintain their DPP’s, both are relived to now be dealing with their debt.