Debt Awareness Week: Sarbjit’s story (part one)

We’ve been talking to our customer Sarbjit about how debt has affected her life.

In today’s instalment, we’ll be looking at how, despite working two jobs and renting out a property, she saw her debts spiral out of control when she was hit with a number of unexpected expenses.

Where her troubles began

Sarbjit has two jobs at the NHS, one full time and one part time. She’s a homeowner and rents out another property. She fell into financial difficulty because she was guarantor on her daughter’s student accommodation and her daughter didn’t pay her rent.

This eventually resulted in Sarbjit being handed a county court judgment (CCJ). On top of this, she was landed with an unexpected tax bill for her second job. By the time she turned to us, Sarbjit was drowning in £45k of debt.

A vicious circle

Trying to manage her money worries alone had only made Sarbjit’s situation worse.

 As her debts started to mount, she had decided to take out a secured loan against her home to pay off her tax bill and car finance. As the rate of interest on the loan was lower than on the car finance, this seemed to make sense.

But the loan wasn’t enough to get her back on track. Sarbjit said: “It was all spiralling out of control.”

She explained: “It kind of made things worse as in I've got more of a debt now and it snowballs because you start off with the small one and then, you know, I’ve read about it, you borrow, borrow and it gets worse and worse. So I thought I can't carry on borrowing. Not that I could do anyway with the bad credit rating that I have with the defaults.”

Debt doom scrolling

One day after coming home from work, Sarbjit started feeling incredibly anxious about the debts that were piling up. She explained: “During the day, I'm doing my work etc. I'm not really thinking about stuff… It’s when I got home [it really affected me]… I think most people, they start whirling around in their head and they start worrying.”

The CCJ she’d got as a result of being a guarantor for her daughter was a big concern. She said: “I read up about it and you can get a charge on your property, they can do this, they can do that. And you know [what it’s like], when you endless Google search and you're thinking ‘oh God, this doesn't look good’.”

The money she owed to HMRC was also giving Sarbjit sleepless nights. She said: “I was worried about the tax debt quite a lot because I read up on Google again that that's such a serious debt, like they actually force themselves into your property.”

Light at the end of the tunnel

After working herself up into a bit of a panic, Sarbjit decided she needed help. So she did another Google search, found Money Wellness and made an online enquiry.

She explained: “I’d actually forgotten that I’d filled in the form [because] it was like late at night. So the next day I got a phone call when I was going to work. And they said, ‘You contacted us.’ And I said, ‘Oh well, I don't really remember’.”  

Despite not recalling making the enquiry, Sarbjit is very glad she did. She said: “I found Money Wellness really helpful and really understanding.

“I was like in a black hole. And then I saw the white light. That's the way I described it. It was like there is light at the end of the tunnel.” 

She added: “There was no judgment, you know… They sort of explained the process and what they do etc. and it sounded really good and I thought, you know, is this too good to be true? So I just went through with it and even the first session… just talking it through for an hour, that made a heap of difference. I thought there is a way out of this.”

Breathing space

After listening to Sarbjit’s story and going through her finances in detail, we applied for breathing space on her behalf.

Breathing space gave Sarbjit 60 days’ protection from her creditors while we helped her find a longer-term solution to her debt problem.

During those 60 days, her creditors:

• stopped applying interest and fees to her debts
• paused attempts to collect the money she owes

How a free debt management plan is helping Sarbjit

We recommended a free debt management plan (DMP) as a suitable long-term solution to Sarbjit’s money worries. It will allow her to pay off her debts at a rate she can afford while having enough money left over to manage her day-to-day expenses.

Having negotiated lower payments with her creditors, we’ll now take a payment of £90 each month from Sarbjit and divide it fairly between her creditors. We’ll keep doing this until her debts are paid off.

They accounted for everything

It will take Sarbjit longer to pay back what she owes with a DMP, but it means she’ll be able to manage on a daily basis without getting deeper into debt.

When we go through your budget, we make sure we account for absolutely everything, including gifts you might need to pay for throughout the course of a year, haircuts, dentist and optician appointments, your MOT, pet food, the lot. It even includes money for the occasional treat.

Sarbjit highlighted how important this is for a person’s mental health. She said: “You’ve got to account for everything. And that's what Money Wellness did… your car, even getting your nails done… It sounds ludicrous but that's good for your mental health… you need that sort of thing. And it might not be anything to, you know, to somebody else, it might not be important. But, you know, I don't go out, I work all the time, so it's important to me.”

Coming tomorrow – part two

Tomorrow, in part two of our interview with Sarbjit, she talks about the obstacles Asian women may face when it comes to seeking debt advice.