'Spiralling debt nightmare cost us our home'

The bad times behind her, Helen enjoys peace of mind on the beach

As Bank of England figures show personal debt rising to levels seen at the time of the financial crash, a couple tells how their spiralling debts had extreme consequences.

In 2012, hardworking couple Helen and Tim found themselves at the centre of a debt nightmare that would end up costing them their home.

After a long period of sick leave, which coincided with her mother's death, Helen had to quit her well-paid job at a local hospital.

Almost simultaneously, Tim's income, from his window cleaning job, was cut in half after a change of contract.

And with their monthly income all but annihilated, the couple quickly racked up unmanageable debts.

Over an 18-month period, pressure mounted as they began defaulting on personal loans and credit cards payments, and all the while the interest was adding up.

They found themselves heading straight into the modern day equivalent of a debtors' prison.

'Brutal phone manner'

"I had default notices, left right and centre," says Helen.

"My mobile phone used to ring constantly and it would be the bank.

"You knew what it was they wanted but you didn't have it.

"And as soon as they knew we were struggling, they hardened their approach."

Recalling her dealings with one bank, she says: "They made life much more difficult and they were brutal on the phone."

"Because we were struggling to pay the mortgage, I was taking cash out on my credit card.

"I kept thinking it was a short term problem - that the solution was just round the corner.

"Also the credit card company kept upping the limit, we must have paid thousands and thousands in interest and charges."

Collapsed on the floor

When the couple started to miss payments on their mortgage, it began to dawn on them how serious the situation had become.

Initially the bank agreed to extend the loan period and reduce the monthly payments, but as their money worries deepened, the pair found they were unable even to make the reduced payments.

"I called the bank one day, and the woman on the phone said we were literally a couple of payments away from repossession.

"She said if we did not make the payments due that day, they would take steps to repossess the house."

"I came off the phone and collapsed on the floor in a flood of tears."

Luckily the couple were able to get the money together from family members to pay what was owing that month.

Disturbingly, however, when Helen called back the next day she was told the bank was nowhere near seeking repossession.

But the couple soon realised their only way out was to sell their home and pay their debts, which had spiralled to £40,000 in a matter of months.

Helen estimates that at least 10% of this debt was in interest alone.

'Treated like a thief'

"The credit cards are the worst, when you get into debt with a personal loan, there is the odd charge, but with the credit card it just snowballs as the interest mounts up.

"Soon we were even struggling to chip away at the interest."

Although they lost their home, Helen and Tim count themselves lucky.

"If we had had children and they were going to a local school it would have been different."

But they had enough equity in their home to pay their creditors, pay a year's rent up-front and invest in a new business venture, which despite a difficult start is now doing well.

A "breathing space" scheme and free money advice would have been helpful, she says.

"You can't really think when you are constantly being called by creditors".

But apart from the obvious stress and the sleepless nights worrying about how to make payments, she says the worst thing was the way she was spoken to by her creditors.

"People make you feel like a criminal. You are treated as if you have been stealing.

"It wasn't necessarily the words, it was they way they spoke to me.

"I didn't expect to be treated like some kind of social outcast."