Case Studies Legal Action Stopped

Scenario:

Legal action by creditors stopped.
A debtor was previously in a stable relationship that had broken down a couple of years beforehand. He moved out of the home which naturally put an enormous strain on his finances due to having to pay for living costs and also his obligation to pay maintenance for his one child. His unsecured borrowing was £42,000 over 17 creditors. For two years he struggled financially and tried to do as much overtime as possible to make ends meet. Eventually his health suffered and he was referred by his employer to see what could be done about his financial situation.

Advice Given:

It was soon established that the debtor’s disposable income was £415 per month, without overtime. To repay the £42,000 back to creditors and providing there was no further interest or charges to pay would have taken the debtor eight and a half years. Additionally two of the creditors had taken legal action to recover their loans, with serious consequences.

The Outcome:

With our help the debtor proposed an Individual Voluntary Arrangement, which was accepted by the requisite majority of creditors and resulted in a dividend payment to creditors of 40 pence in the pound with no further charges and interest accruing. The two creditors with the legal action were bound by the debtor’s arrangement, which resulted in the court removing the attachment of earnings that had previously been granted. The debtor’s health was restored and he returned to work with the confidence that his debts were being discharged lawfully.