EAP Managing Debt – Case Study
A short case study of managing debt can work using the EAP services.
A male employee lives with his partner in a property they rent from the council.They have two children of school age. Their total monthly income is £1,895 and outgoings are £1,550. This leaves £345 a month disposable income. The employee has non priority debts amounting to £24,000.
He called the EAP service provided by his employer, and was given three options for resolving the debt problem.
Option A – Informal Arrangement
The counsellor went through the debt recovery procedure. If all the creditors agree to freeze interest then it will take about ten years to repay the debt in full. The counsellor outlined how to handle creditors and potential court action.
Option B – Individual Voluntary Agreement (IVA)
The counsellor explained how IVA works. The employee would need to talk to insolvency practitioners. With an IVA he will pay for five years.
Option C – Bankruptcy
An income payment agreement is likely and this will run for three years. The arrangement would not include holidays in the expenses and the child benefit would not be included.
Bankruptcy will not have any adverse effect. If an IVA is viable, then the trustee can fast track for an IVA and cancel the bankruptcy. Bankruptcy may be the most viable option.
In response to the advice, the employee chose to change his bank account and further consider his options. He was also sent a debt pack via e-mail.