John Brightwell was on a fast-track to promotion in the Royal Air Force, had a sizeable house courtesy of the RAF, a new car and and took his family on regular overseas holidays. But there was one flaw in this comfortable set-up: Mr Brightwell owed £33,000. Most of the cash had been spent on credit cards to help pay for holidays and hi-tech home gadgets such as a surround-sound television, a pair of computers, the latest hi-fi equipment and general entertaining. And the creditors were closing in.
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Then when Mr Brightwell's wife Maria gave birth to twins, the couple were devastated. "We simply did not know what to do; we were at our wits' end, and we didn't want to borrow from friends and family." The Brightwells, who live in Newcastle upon Tyne, already had two children, a boy and a girl. And Mr Brightwell was spending £650 of his £1,200 to £1,300 monthly take-home pay on debts. These included £7,500 on a car loan, £7,000 and £3,500 personal loans from Direct Bank and Direct Line respectively, and £11,000 on his Visa card, Mastercard and store cards "We were hardly able to cater for our children's everyday needs let alone our own," he says.
The Brightwells saw a television advertisement by Baines & Ernst, the debt management company, pledging to consolidate people's owings and reduce their monthly payments by up to 80 per cent. "It was just too good to be true", says Mr Brightwell. He phoned the debt management company and asked for help.
A representative told Mr Brightwell to change his bank and cancel the nine direct debits he was paying monthly to his creditors. In return, he paid a deposit of £530, plus a monthly sum of a similar amount, £90 of which was to cover the company's administrative costs.
"Baines & Ernst said they had given me a glorious opportunity to sort out my affairs, and they had vicars, policemen and other members of the forces on their books. At first it seemed I was saving money by going to them, until a very different story began to unravel."
Then one of the twins had developed heart complications and Mr Brightwell and his wife, who worked part-time, were juggling work and home life with frequent visits to hospital. A month later, Mr Brightwell called Baines & Ernst. But instead of a reduced debt, he found his borrowings had increased. "I found my debts had risen from £33,000 to nearly £40,000," he says. One of the companies won a county court injunction against him.
Mr Brightwell also found Baines & Ernst's decision to cancel his direct debits and bank account meant he had been blacklisted by all the credit agencies and could no longer obtain credit. He says that when he tried to complain, the company not only fobbed him off, but he was unable to speak to a supervisor and was handled by a different rep every time he phoned.
"They were using very obvious sales techniques to keep me sweet and giving me case histories about people who were worse off than I was," he says. A confused and bewildered Mr Brightwell contacted Which?, the Consumers Association magazine, listed his complaints, and they ran a consumers' report on the case. Then Mr Brightwell made another wise move. He contacted a creditor, Direct Line, and asked if they could help. They agreed to reduce the interest on his loan and arranged a lower monthly repayment. They also advised Mr Brightwell, after four months with Baines & Ernst, to cancel his arrangement with them.
When he told the company he wanted to cancel, they were very reluctant. "They were obviously very unhappy that I was leaving them and they refused to return my deposit," he says. But after six weeks of persistent phone calls and letters they eventually returned his £530.
Then Mr Brightwell bought himself out of the RAF with cash lent by his father-in-law, and settled some with his £7,000 pay-off. And for the past 18 months he has been working night shifts as a lorry-driver. "My debt burden has certainly shrunk, and we are now able to manage as a family," he says. But because he changed banks and cancelled direct debits, he is still on the credit black-list and will not be able to obtain HP or credit for some time.
Tony Featherstone, customer relations manager of Baines & Ernst, says: "We are here to try to save people from serious debt situations, which can sometimes involve complicated accounting. People fall into debt traps for various reasons, and we are often their last resort. We do what we can to prevent them from sliding into greater debt difficulties.
"We always ask clients to change their bank and cancel direct debits to creditors, for if they fail to pay their monthly repayments, the companies have the right to seize all of their goods.
"If they receive default notices barring them from obtaining credit, it will save them further problems. It is impossible for our representatives to work the 70 hours our offices remain open, and that is why people sometimes get different reps when they phone. We handle all clients' queries as quickly as possible, and our waiting time has gone right down. There is no way we would fob anyone off."
