Having found themselves in financial difficulty when Mr Singh was made redundant from his job as a bank manager they sought financial advice from their local Citizen’s Advice Bureau.
A money advisor helped them re-asses their finances, see where cuts could be made in the short term to light the burden until Mr Singh was back in work. It was decided that they would live off of the redundancy package Mr Singh had received until he found employment again. Living more or less the same as they had been they were still able to service their £15,000 debt they had gained over the past 7 years to finance family holidays and cars.
Mr Singh returned to work after almost a year of unemployment, however is new job was less well paid than the family were used to, and they now found themselves £600 short a month than they were accustomed too. With such a shortfall the Singhs were not able to cope with their level of debt and fell into arrears on the debt, this prompted them to once again seek money advice.
This meeting with the money advisor helped them budget around their new income, however it was clear they were not going to be able to re-pay their debt. The recommendation was made that the Singhs should enter into a DAS debt payment programme (DPP). This scheme would allow them to pay off their debt over a period of time using their surplus income. Various calculations and talks with the Singhs allowed the money advisor to propose a DPP just over 3 years with a monthly payment of £400 per month. The proposal was accepted by all creditors and the Singhs commenced payment.
Mr and Mrs Singh kept up with their DPP and had regular 6 monthly meetings with their money advisor to discuss any relevant changes. Eighteen months into their plan Mrs Singh had another baby and it soon became clear that she wouldn’t be able to go back to work following her period of maternity leave. It was felt that to pay for childcare for 3 children would render Mrs Singh's part-time wage obsolete.
Knowing that they needed to keep their money advisor aware of changes to their circumstances the Singhs once again visited their money advisor. With Mrs Singh out of work they would be losing £100 of their surplus income per month and discussed how this could potentially affect their DPP. The decision was taken to draw up a possible variation of DPP, as their payments to the DPP would be reduced, their money advisor explained that the adapted proposal would have to pass the Fair and Reasonable Test to allow them to continue on the DPP at the reduced rate.
The Singhs now owed £9,600 to their DPP, and with the reduced offer of £300 per month, their money advisor put forward a proposal of 2 years and 8 months. This was obviously adding time to their DPP. However following discussions between the DAS Administrator and the money advisor, it was felt the DPP was still fair and reasonable and that the Singhs should be allowed to continue at the new lower rate.
The flexibility of DAS allowed the Singhs to pay back their debt over time that was reasonable for them and their family circumstances.