John had been trading as a self employed taxi driver for 7 years. Initially he rented his car from the firm that he worked with. He then decided that it would be more cost efficient to run his own vehicle. He therefore took a £10,000 loan and bought a nearly new vehicle.

The car ran well for the first 6 months but then it started to have problems. First of all the gear box had to be replaced. This in itself was a costly exercise, but it also meant that John was off the road for a week unable to work. He funded both the garage bill and his lost income with his credit cards. Over the course of the next 12 months, John’s car was on and off the road. Taking into account garage bills and lost earnings, he feels that this cost him upwards of £10,000. He finally decided that he would have to bite the bullet and get a new car. He bought a more reliable car on a lease agreement and took a personal loan of £5000 to pay for the deposit.

For the next two years, John felt that financially things were getting better. He had some regular customers and was earning reasonable money. He continued to use his credit cards but the monthly payments seemed to be under control. However, he was then unfortunately involved in a bad car accident. This was not his fault and the insurance company paid for the damage to the car. However, John suffered a whip lash. He was unable to work for two months while he had physiotherapy. During this time his income dropped to almost nothing. He got but by using his credit cards.

Thankfully, the physiotherapy worked and after a couple of months John was able to drive again. However, initially he was only able to sit in a car for a maximum of four hours per day. This meant that he was able to start earning again but his income was severely reduced. By this time, John was fining that he was getting into serious financial difficulty. He had 4 credit cards, two personal loans and the lease agreement for his car. He calculated that her owed just over £50,000. John was robbing from one card to pay the minimum payments on the others and his debts were getting worse and worse. He was also getting behind with his payments to the Inland Revenue which he had always been careful to keep up to date in the past.

John had a property with equity of £35,000. However, because of his self employed status he was told by his mortgage lender that it would be difficult to release this. Even if it could be done, there would not have been enough to pay off all of his debt so it did not seem to be a good idea.

John found out about the Individual Voluntary Arrangement (IVA) through the internet. He was initially looking for advice about bankruptcy, but found out that if he went bankrupt, it was likely that he would loose his house. He did not want to do this as the house was the only thing that he had to show for all of his years of work. The IVA was therefore the perfect solution. All of his debts (including the Inland Revenue) were bound into the agreement. This involved paying £450 per month for 4 years and then releasing equity from his property to complete the IVA with a lump sum payment. The IVA meant that he would settle his debt and keep control of his house, which will still be his after the IVA was completed.