Financial difficulties

Case studies

• 'My debts have been building up recently, and now my card has been declined at the supermarket’

  Leanne was at the check-out with a trolley full of shopping and a queue behind her, when she was told that her card had been declined. Her debts had been building up and she was fed up of borrowing more money and being broke. She called us.

  How we helped Leanne

  Leanne told us that she just needed some breathing space – and a bit of help managing her debts. We put her in touch with a free debt charity. They worked with her to start reducing her debts. They offered her lender more affordable repayments that left Leanne enough money for the essentials.

• ‘My dad is being chased by a debt collector and we don’t know what to do’

  Jon found out that his dad was being called by a debt collector at several points throughout the day. His dad had told them that he couldn’t afford the payments they were asking for, but they still kept calling.

  How we helped Jon

  When Jon called us and told us about his dad’s situation, we decided to speak to the debt collector on his behalf. It seemed that although they’d been chasing Jon’s dad – they hadn’t tried to find out how much he could actually afford to pay.

  We felt this was unfair. We told them to work with Jon’s dad to find an affordable repayment figure. We also asked them to compensate him for the unnecessary stress and inconvenience they’d caused him.

• 'I’ve had a letter from a debt collection company – and I’m worried they’ll send the bailiffs round’

  Lewis was struggling with his loan repayments, and he knew they were overdue. He’d ignored the letters from the loan provider, but when he got a letter from a debt collection company, he was worried that he’d get bailiffs knocking on his door.

  How we helped Lewis

  When Lewis called us we explained that companies should only use debt collectors as a last resort. We also suggested that Lewis work out how much he could afford to pay back. We then contacted the loan company on Lewis’s behalf and talked through his problems to stop any further action being taken.

• A consumer says options were not explained when she wanted to exit a hire purchase agreement early because of financial difficulties

  Judith took out a hire purchase agreement for a new car, but a month after taking out the agreement her circumstances changed. It meant that she wouldn't be able to make the payments on the agreement, and realistically wouldn't be able to for a long time. She got in touch with the lender and asked if she could hand back the car and leave the agreement early. 

  The lender told Judith she'd have to do this under a process called voluntary termination. This was a right she had in her agreement (and in statute) which allowed her to hand back her car early on the basis she was liable to pay half of the agreement (and some items such as arrears and any charges for damages). For Judith, this came to around £10,000 and the lender offered to set up a repayment plan if Judith couldn't afford to pay this in one lump sum. 

  Judith said there must have been a better solution for her than this. The lender said there wasn't, so Judith came to us to make sure that this was right.  

  How we helped Judith

  When we looked at what had happened, we didn't think the lender had considered Judith's best interests because it didn't explore any alternative ways that she could exit her hire purchase agreement. We thought the lender should have considered and clearly explained another option which would allow Judith to hand back the car, sell it, and deduct the proceeds from the total amount she owed - a process often called voluntary surrender. Even though Judith hadn't fallen behind in her payments at the time, we thought the lender should still have considered it as a matter of good practice. 

  Under this option Judith would most likely have owed the lender around £6,000 - considerably less than she did under the voluntary termination option. This was because the car was brand new and still worth a considerable sum. It was also because Judith was very early into her finance agreement so would have likely received quite a big amount in the sale proceeds of the car. 

  We thought if the lender had explained this to Judith along with the likely implications of both exit options, it's more likely she would have chosen the voluntary surrender option.

  We asked the lender to put Judith in the position she would have been if it had let her exit her agreement by voluntary surrender - reducing the total amount she owed under the agreement by the proceeds of the sale of the car. We also asked the lender to come to suitable repayment agreement for the remaining amount she owed after this.