Case Studies 28k Reduced to £200pm

Scenario:

Repayments to credit card debts of £28,000 were £880 per month - here a re-mortgage solved the problem reducing monthly repayments to just £200.
A 38 year old individual had credit card debts and unsecured borrowing to the sum of £28,000, resided with his spouse in a property with a mortgage of £70,000. The property had risen in value to the sum of £160,000 leaving equity of £90,000 to be equally shared with his spouse. Due to a change in his employment status the individual was unable to meet his normal contractual and was threatened with court action which would jeopardise his work situation.

Advice Given:

As the debtor had assets greater than his liabilities he technically was not insolvent. A Debt Management Company was briefly considered although it proved more prudent to re-mortgage the house and raise sufficient funds to pay off the credit cards and loans in full at a more attractive rate of 5.5% as opposed to the very high 19% charged by the loan companies. Unfortunately his credit rating had deteriorated due to recent missed payments. The extra cost of the re-mortgage was minimal compared to the monthly payment to his creditors of £880, thus making a massive reduction in his outgoings; the only downside being that the debt is spread over the term of the mortgage. It is however imperative that the individual no longer drops into debt by continuing to use the credit cards to supplement his income.

The Outcome:

The re-mortgage was successful and the debtor has cleared all his unsecured borrowing. His credit cards have now been cut up and advice was given on how to manage within his means.