Case Study

Case 1:

• A 34-year-old Castlemilk Budgeting Service client on a low income with a young family has a £493 debt.  After two years of repayments, the client had paid £430 to the creditor.  The budgeting service found that over this period only £60 of the principal sum was paid off; the rest had gone towards paying the interest.  Although a relatively small debt, the repayments are impinging on the client's available income for essential expenditure.  With the creditor being unwilling to waive or freeze the interest, the client will remain in the debt trap due to the extortionate interest having a detrimental impact on the client and his family.

In this instance, financial assistance from the project would allow the onerous debt to be settled by the scheme.  The client could then repay at a rate suitable for his level of income, and a significantly lower rate of interest. The client would be introduced to responsible community lenders (credit unions) and through links with local organisations, provided with financial education and money advice in order that the client can make fully-informed financial decisions in the future.

Case 2:

• An unemployed Pollok Budget Service client living with her partner and three children has debts totalling £2,993.  The budget service assisted the client after a creditor had initiated legal proceedings.  The budget services were able to negotiate a repayment plan with the creditors and although the client is repaying according to this plan, interest is continually accruing impacting the client's ability to clear the debt, leaving the risk of legal action hanging over the family.

The project could repay the creditors charging high interest, and allow the client to repay the loan fund at a significantly lower rate of interest.  Furthermore, the project has developed links to local employment and training opportunities with provision for childcare assistance.  As part of the longer-term outlook of the project, the client would be encouraged to participate in such opportunities, with a view to reintegrating the client back into the workforce, benefiting the family and the community.

Case 3:

• A Castlemilk Budgeting Service client living with her grown up family has debts totalling £1600. The client is incapable of returning to work due to ill health and even with the debts being negotiated, the client cannot fit the repayments into her benefit income.  The only remaining option for the client is bankruptcy, for the sake of £1600.

The project is designed to prevent such occurrences that would have stark consequences for the client. Debt redemption would provide the client with a suitable repayment plan with time to repay the fund without the threat of legal action by creditors.