Single person - bankruptcy case study
Roger was a self-employed carpenter. He enjoyed a reasonable salary for several years and was easily able to afford rent and household and personal expenses. All seemed under control until he recession began to affect his workload. At first the change in income was slight and he tightened the belt and was able to meet all living expenses. He used up meagre savings, but by then he was only working 3 or 4 days a week.
He figured that the downturn wouldn't last long and he had to maintain payments on the bills, so the only way to meet all expenses was to make use of the overdraft facility his bank had provided. Before long he was up to the maximum and had to request for an increase in the limit. With work showing no signs of picking up he had to make use of a credit card to keep his vehicle that was essential for work, on the road.
Roger began to really worry when payment for a couple of jobs he had done was not forthcoming. The clients he had done the work for had defaulted on paying him. Now he couldn't make essential payments and took out a second card. Six months passed with workload continuing to decrease and no alternative employment to be found. His bank had agreed to a loan, but the repayments on the debts were crippling.
With the benefit of hindsight at some point in this process he might have discussed his situation with a debt advisor. But he had always been able to cope in the past and Roger felt that he would survive the dark days. However when he finally plucked up the courage to add up the debts he was shocked to discover they came to more than £20,000. The £500/mth repayments were funded by drawing further credit and he realised he was paying out money he didn't have and the debt was still growing.
At this point he realised that help was needed. He researched options open to him and worked out a simple income and expenditure plan. Income from his work plus some benefits he had applied for just covered rent, bills, food and essentials. He had no money available to repay to the creditors. A family member came to the rescue with the bankruptcy fee, and Roger voluntarily declared himself bankrupt. It was not something he did lightly but was the only solution that worked. He was able to continue in his self-employed work and look forward to better days.
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