Breathing Space and Best Advice
4 March 2021: With the introduction of a new “breathing space” regime for individuals with debt related issues about to start we have become aware of a case being conducted by one of the firms that will be a debt advice provider who is authorised to oversee the scheme. We think this sad story is well worth sharing as it flies, we think, in the face of what a reasonable person on the Clapham Omnibus would think was sensible for the individual involved.
Some 10 years ago an individual went to a debt advice organisation and sought help. They suggested a Debt Management Plan (“DMP”).
The individual has now been in that plan for 10 years paying contributions regularly throughout. Continued payments are now proving too difficult due to C19 related issues – hence seeking advice.
Over £60k has been paid in to the DMP so far. The estimated remaining debt is some £140k and the estimated completion date is the year 2067.
If this individual had gone bankrupt then the matter would, most likely, have concluded within one year with, perhaps, an income payments/order lasting a further two years. They would have been free of the original debt for 7 years by now.
If they had pursued an Individual Voluntary Arrangement (“IVA”) then, most likely, they would have been out after 5 years, assuming their good compliance with the DMP had continued through the IVA. They would have been free of the original debt for 5 years by now.
The DMP has meant that any windfall, any winnings or inheritances, would most likely have gone to creditors – the DMP really has nothing to commend it. Legislation is, currently, in place to give people the opportunity to wipe the slate clean and start again. This individual appears to have been treated in a cruel way, possibly because they perceive that Bankruptcy was too “bad” to contemplate having been brought up on Dickens and Mr Micawber/Debtors prison etc.
If you want the best advice for your client, first time, every time, speak with us. We will present you with the unvarnished truth about the options available, the pros and cons of each, and we will let you take your informed choice from there. We will not encourage you to suffer the awful death by a thousand cuts this poor soul has had to endure.