She had £38,560 of debt which comprised four credit cards, a bank loan and an overdraft. The debts had built up over three or four years; as long as she paid the minimum amount she could not see the problem looming.

Alice then took the step of obtaining a consolidation loan and paid off all the credit card debts and then, like so many people, instead of cutting up the cards, she continued to use them. She took the advice of a bank and approached a charity to enter into a Debt Management Plan, but given the amount she could afford to pay monthly and the outstanding balance this would have taken over ten years to repay the balance, just when she was expecting her second child.

The charity referred Alice to Phillip Allen who, together with Alice, put a proposal for an Individual Voluntary Arrangement to creditors and an arrangement was agreed to pay £455 per month for 60 months, this was compared to contractual repayments of £640 per month. All of a sudden, Alice could see light at the end of the tunnel.

Alice stayed in regular contact with Debt Lifeboat so if an unexpected cost arose, she was allowed to miss a payment and increase her contributions over the following six months to catch up.

Then after 43 payments, the final pressure began to build up with her eldest daughter becoming 16, she lost Child Tax Credit and CSA support and she needed £275 childcare costs for the youngest daughter. A further creditors meeting was convened to propose that for the final 17 months of the arrangement, the monthly payments be set at £350 per month and this was agreed.

At the end of the arrangement, Alice had kept her job, which she would have lost had she been made bankrupt and paid £24,465 to pay off £38,650 (plus accruing interest) of debt.