George, a 58-year-old carpenter from Norfolk, has turned his life around after falling into £78,000 of debt. He started relying on credit cards after not being paid the £22,000 he was owed for work completed during Covid, leaving him with just £40 in his bank account.
Spiralling into debt
George said: “It was all going very well for a long time, very good money… until the run up to Christmas. The guy just went totally silent on me. He refused to answer my phone calls.”
With hardly any new work coming in, George started falling into a depression. He felt isolated and did not know where to turn, choosing not to tell his family about his problems.
He said: “Work wasn't coming in and what work I could find, I was basically messing up because my head just wasn't in it and I was still worried about the money. I didn't speak to my partner about it because I just didn't want to get her involved.
“So I just kept on borrowing and borrowing on credit cards and hoping that work will come in and I'll be able to pay them all back. It never happened.”
Finding a way out
Eventually, his minimum monthly credit card repayments had grown to £5,000 just to cover the interest owed. It wasn’t until one day, when one company called to find out why George had not made a payment, that he was finally pointed in the right direction to seek debt help.
George was placed into a debt management plan (DMP), an informal agreement where you pay one regular monthly payment based on what you can afford. The payments are distributed to the people you owe money to by a licensed debt management company or charity.
A DMP covers unsecured debts like credit cards, store cards, personal loans, and overdrafts. It cannot be used for priority debts like mortgage, rent, or council tax. But because it is not legally binding, creditors are not legally forced to freeze interest or stop taking legal action.
George said: “I had no idea there's help out there. I end up owing about £78,000 in the end. Finding a payment plan kind of gave me new life because I was close to… I'll be honest, killing myself, because I just had no way out.
“I couldn't sleep. I couldn't talk to anybody. I didn't want to go asking for money from anybody because I couldn't pay it back.”
Life-changing impact
George estimates his DMP will clear his debts in five years and he is roughly almost three years into his plan. But a DMP isn’t right for everyone. The main advantage for George is that his DMP provider speaks to his creditors on his behalf.
However, having a DMP can make it harder to borrow money, as creditors can record partial payments or defaults on your credit report, since you’re making reduced payments. A creditor may also be able to add a DMP marker. Any defaults or missed payments are stored on your credit file for six years.
The other downside is that some creditors may still decide to contact you, and if they don’t agree to freeze the interest, you may end up paying more overall, as you are paying over a longer period.
Jaco Wilsenach, COO at debt advice and management company PayPlan, said: "There is no one-size-fits-all solution when it comes to debt.
"The most important thing is seeking trusted, independent advice as early as possible, to fully understand all the paths available and find the solution that fits best with you and your individual circumstances."
For George, being back in control of his debt has been life changing. He said: “It was a series of issues that caused me to get into the position I was in. I didn't purposely go and borrow a bucket load of money and not pay it back.
“I'm in a good space now. I can deal with my payments and as long as I can deal with it and I don't have letters coming through the door, then I can get on with my life.”
Anna Hall, Corporate Director for Debt at the Money and Pensions Service, said: “If you are struggling with debt the best course of action is to seek free and confidential debt advice to help you understand the different ways of handling debt and which one might be best for you.
"Don't suffer in silence if you're struggling with debt. Speak to one of the following organisations: Citizens Advice (0800 240 4420) StepChange (0300 303 5300) National Debtline (0808 808 4000).
For mental health support, call the Samaritans for free on 116 123, email them at jo@samaritans.org, or visit samaritans.org.
