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IVA Case Study |
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Marion and David were both working in full time
jobs. Marion was a Travel Agent, and David
worked as a Recruitment Consultant. Together,
they brought back around £2500 per month. They
saw credit facilities as useful ways of getting
goods up front, and they never had any problems
managing repayments.
They had a store card, two credit cards and a
personal loan, which had been used to buy a car.
In addition, they were making mortgage payments.
But they never ran into any difficulties meeting
these. They enjoyed a reasonable lifestyle –
going out with friends, eating in restaurants,
and at least two holidays a year.
Their financial difficulties began when they had
their first child. Marion minimised her income
gap by working until the last minute – she began
her maternity leave only 2 weeks before her
child was born. However, it was a complicated
birth and Marion ended up spending several weeks
recovering in hospital. Her income fell to
statutory maternity pay.
This meant that the monthly household income was
reduced by £600. In addition, David had to take
time off work to look after her and the baby in
hospital. To make matters worse, the day-to-day
costs of petrol and parking in the hospital
car-park put them under extra financial strain.
David decided to supplement their income by
using credit cards. He did not feel that there
would be an issue with repayment as he believed
that Marion would return to her full time job.
The credit cards were merely a convenient way to
see them through – a stop-gap measure.
However, due to complications with her health,
Marion was only able to go back to work
part-time. This meant that money was extremely
tight, especially now that there were additional
child minding costs and an extra mouth to feed.
Things started to spiral out of control.
For the next 18 months, Marion and David tried
to juggle their debts by taking consolidation
loans.
However, every month they were forced to rob
Peter to pay Paul and soon their monthly
repayments increased to more than £900 – way
more than they could ever possibly afford.
Something had to be done to stop the situation
from getting any worse. They began to fear that
they were heading for bankruptcy – and Marion in
particular felt that she couldn’t cope with
losing the house.
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