what is the way forward - pls help

[missmoneypenny1]

hi all

 

I am very worried about my papents. about two years ago they re motgaged their house with moving works, moving works saw that they had a large loan that was securred on the house and told them the only way they would allow them to re motgage with them was if they either agreed to pay this loan off out the re mortgage money or if the loan company being ge money agreed to be second charge on the house.

 

They contacted ge abd they verbally agreed they would be happy to be second charge and moving works first, however moving works would not do give mortgage unless they had this in writing. they need the money out the house to pay off other debts and could not afford to take the money out the house to pay off ge money. after many many phone calls ge kepth saying they where dealing with it, they even sent people round to value their house, meanwhile while this is going on my parents are sinking further into debt, hence why they need to re mortgage, and every mortgage company was the same, they wanted to be first charge.

 

This all went on for a year with lots of stress and my mum being fobbed off by ge, they got nothing in writing and in the end had to go ahead with the moving works mortgage as the offer was on its final day. by this point they are on the verge of loosing the house and cant risk being re credit checked as over the year ge money messed them about the debt has piled up, they where holding out for ge to confirm second charge in writing so they could re mortgage and pay their debts off.

 

instead they have to out ahead with the mortgage as they need the money but now moving works will only give them the mortgage if they pay off ge money with the money from the re mortgage. they had no choice and had to go ahead with this. so they now still have lots of debts cos they have had to pay off ge money with the money they were hopeing would bail them out, but hasnt. they are paying two hundred pounds on a credit card a month 180.00 of this is interest. they have tried to apply for a new credit card with 0 per cent balance transfer so at least if they were paying 200.00 none of this would be interest,but that got declined.

 

their credit history is now terrible thanks to ge, i know they have also spent money on things they prob couldnt afford, but never thought it would ever come to this. I just do not know what to suggest to help them move forward, their mortgage is going up soon by two hundred pounds a month and they want to try and get a better deal, but who will touch them with bad credit?

 

please help, what is an IVA would this help them and how does that work?

 

my dad also needs a new car his is now really old and barely running, he deserves a newer one and i want to try and help them. hes not sleeping at night, crying in the morning when he walks the dog and is now having chest pains.

 

im so worried, how can they get this sorted out?

[PriorityOne]

Are you able to itemise the debts that they have ?

 

How old are they ?

What kind of debts are they.... is there more than one credit card ?

If so, how much is outstanding on each ?

Are they with the original creditor or a Debt Collection Agency (DCA)

Do they have any County Court Judgements (CCJs) ?

Are any of them secured on the property ?

 

You need to post up a bit more info. before we can help.

 

[alexteh]

If their credit history is terrible then they have nothing more to lose so you've come to the right place for help!

 

Firstly, make sure they understand that creditors cannot take money they don't have! What you need to do is to sit down with your parents, calm them down and work out EXACTLY who is demanding money from them.

 

Then you need to split those creditors into priority and non-priority debts. Priority debts are the mortgage and any secured loans, council tax and current utility bills (but not arrears!). Work out how much these come to each month and then work out how much money they need to live. Ignore any non-priority debts when you do this and don't worry if they've promised to pay back a credit card company hundreds of pounds - it really doesn't matter right now because they won't be getting their money. The CAB can help them work through this if they want face-to-face advice!

 

Next thing to do is to cut up all the credit cards so they don't get into any worse debt for now. If your parents have loans or credit cards with their existing bank, it is a good idea to open a new bank account not affiliated with any of their creditors. What you want is a BASIC bank account which has no credit check or facilities. Get any salary or pensions or benefits to be paid into this new account and also transfer the direct debits or standing orders for your PRIORITY creditors to this account too. Then write to ALL of your non-priority creditors telling them that your parents are experiencing financial difficulties and are seeking advice. Template letters for this (Letter A) are available from http://www.consumeractiongroup.co.uk/forum/general-debt/20758-creditors-dcas-letter-templates.html.

 

Once you have done a budget of your living expenses and priority debts, there may be a little money left over and this is what you will be offering to your creditors. Before you do that though, I'd recommend sending all of your creditors a CCA request (with a postal order for £1) to ensure that they are actually able to collect the debt at all. If you look at http://www.consumeractiongroup.co.uk/forum/general-debt/83035-guidelines-requests-original-agreement.html you'll see the details on CCA requests and how they will help you. A number of your parents creditors are likely not to be able to supply the relevant paperwork and you can then ignore these completely as the debts are unenforceable - they may continue to hassle you but you can ignore them. For those creditors who can supply the relevant paperwork, the next step is to check through the last 6 years worth of statements to ensure they've not added illegal charges and check whether they have mis-sold payment protection. You may have to send the creditor a SAR request (and a £10 cheque/PO) to get all the information they have on you to determine this. Once you have all the information, reclaim any charges/PPI and this will bring the debt down (or even mean they owe you money!). This process can take weeks or months - all of which time the debt is in dispute and they cannot force you to make payments!

 

Once you have a final list of non-priority creditors, you can work out on a pro-rata basis how much you can afford to pay them each month and then send them letter B. If your budget works out that you can't afford to pay anything at all, send letter C instead. If you read through the remainder of the template letters, you'll see responses to the most common replies you'll get back from the creditors.

 

If your parents PRIORITY debt repayments plus living costs exceed their income, then you really do need to seek professional help - the CAB are probably one of the best places to try first. It is possible you can persuade the mortgage company to switch the mortgage to interest only to reduce the monthly payments although there are obvious down-sides to it. I just wish you'd come to us sooner as I'd have advised against the remortgage (I speak from experience - I did exactly what they did - remortgaged to pay off stuff, found it wasn't enough and got secured loans up to the hilt and finally decided enough was enough and sent the keys to the house back to the bank as a voluntary repossession, found CAG and am dealing with my other creditors and am living in a much bigger rented house in a nicer area for less than my mortgage payments and I've not looked back!)

 

Well I've probably gone on long enough for now so read, digest and come back with any questions and someone'll answer as best they can!

 

Good luck and remember that creditors cannot take what you don't have despite how many times DCA's may claim that they can EXTRACT BLOOD FROM YOUR STONE EVEN IF NOT SQUEEZED BY YOU! or something

[missmoneypenny1]

thanks so much for your replies, maybe there is light at the end of the tunnel. I have asked my parents to get a copy of their credit file so I can see what is on there but they are too scared to do it and my mum thinks it will tip my dad over th edge. what i do know is that none of their debts are with a DCA they struggle to pay them and end up greatly overdrawn with bank charges. the credit card they pay 200 a month on and only pay 20 tactually off as all the rest is interest, the bal on that is 12 thousand, i know they have other cards but am not sure what the balance is. nothing is now securred on the house.

 

I am thinking that if their credit rating is bad anyway, we can CCA these creditors as some may not be enforceable, hopefully sort things out now and in six years time if they stay debt free, which they will then all this bad credit will be wiped off, is that right?

 

can you tell me what an IVA is please? i have heard of them but dont know how they work?

 

What you say is right and I guess this is what I need to do, sit down with them. I have advised them to seek prof help, but they dont. how can I help them if they wont help themselves?

 

they need to get a cheaper mortgage soon as it goes up, am i right in saying cos they now have bad credit the rates will be high anyway?

 

I guess they will have to put up with defaults being registered against them for an unenforceable debt, then in six years they will be clear and get get decent mortgage rates again.

 

what do you think?

 

p.s i am so glad you have never looked back and are getting on with your life.

[PriorityOne]

the credit card they pay 200 a month on and only pay 20 tactually off as all the rest is interest, the bal on that is 12 thousand, i know they have other cards but am not sure what the balance is.

 

 

Your parents cannot continue leaving this situation as it is.... the interest is making the problem worse. They need to itemise how much is owed on which accounts and go from there....

 

It sounds to me as if £200 a month is way above the amount they can genuinely afford to pay on the card you mention.... so I would suggest contacting this particular creditor with an Income/Expenditure breakdown, stating that they can no longer afford to maintain payments as they are at the moment, offer token payments of no more than £10 a month and request that interest be frozen on the account.

 

This is the softly, softly approach... which may suit your parents better than going down the route of a CCA request. However, if the creditor gets sh*tty and refuses to accept the proposal, they will need to send the CCA request in order to protect their own interests... ie, stop the creditor from possibly going for a CCJ on the full amount they allege is owed.

 

I suspect that the reason your parents are reluctant to discuss these issues with outsiders is due to a sense of shame. Debt tends to be seen differently across the generations and the older members of our society tend to carry the stigma of shame around with them far more than they should.

 

As for an IVA, I personally wouldn't touch these with a barge pole, but that view may not be shared by others on here....

[The GodMother]

an iva is a voluntary agreement between you and your creditors to pay them so much each month. you need to owe ova £15k but i dont no if this includes mortage.

 

Personally i would follow alexteh advice and sort this out for them. If they wont apply for there credit reports then do it for them.

 

Is there a way you would be able to take ova there fininances for them? it might help them gwt out of debt and sort them selfs out.

[alexteh]

thanks so much for your replies, maybe there is light at the end of the tunnel. I have asked my parents to get a copy of their credit file so I can see what is on there but they are too scared to do it and my mum thinks it will tip my dad over th edge. what i do know is that none of their debts are with a DCA they struggle to pay them and end up greatly overdrawn with bank charges. the credit card they pay 200 a month on and only pay 20 tactually off as all the rest is interest, the bal on that is 12 thousand, i know they have other cards but am not sure what the balance is. nothing is now securred on the house.

 

Seriously, no matter how bad it seems, there are tons of people in a worse situation - myself included a few months ago! By the sounds of it, the credit card balance is chock full of illegal charges so it may end up that they owe your parents money even! Bank charges are probably similar but it's all up in the air at the moment but they should still start the process of reclaiming these too!

 

I am thinking that if their credit rating is bad anyway, we can CCA these creditors as some may not be enforceable, hopefully sort things out now and in six years time if they stay debt free, which they will then all this bad credit will be wiped off, is that right?

 

Not quite no. If after 6 years the creditor has not been paid and you have not acknowledged the debt in any way, it will be statute barred. What you are probably thinking of is that stuff drops off your credit file after 6 years - bear in mind though that DCA's have a nasty habit of putting a default on or something after 5.5 years to screw it up so you're better off dealing with it all now - CCAs are the most important step here - no CCA = no enforceable debt and also no right to put ANYTHING on the credit file!

 

can you tell me what an IVA is please? i have heard of them but dont know how they work?

Personally, I wouldn't touch them. A DMP may be appropriate but with some support from CAG a DMP doesn't do much you can't yourself.

 

What you say is right and I guess this is what I need to do, sit down with them. I have advised them to seek prof help, but they dont. how can I help them if they wont help themselves?

 

Always the hard one - if they wont take professional help, will they take your help? A year ago, I'd buried my head in the sand regarding all my debts - I'd been doing that for about 10 years. It took getting my home repossessed for me to wake up and now I'm in a better position than I've been in for as long as I can remember. When I moved out of my house last October, I had a pile of letters from DCAs and creditors that filled a black bin sack and I dreaded the postman coming. Now I actually look forward to receiving a letter from a DCA so I can laugh at the BS that they tell you (before CCAing them of course). There is light at the end of the tunnel - you just need to enter the tunnel and start walking!

 

 

Yeah they may be stuffed with that in the short term - bear in mind that by following the advice here, they will cut back on their other debt repayments drastically so it may be possible to manage anyway

 

I guess they will have to put up with defaults being registered against them for an unenforceable debt, then in six years they will be clear and get get decent mortgage rates again.

 

No, they won't have to put up with defaults BUT you need to move quickly as its far easier to stop them by proving the debt isn't enforceable than it is to get them removed afterwards! Same goes for CCJ's!

 

what do you think?

 

p.s i am so glad you have never looked back and are getting on with your life.

 

I think you need to sit your parents down and get them to wake up and deal with their reality NOW! Not next week, not next month - they need to sit down and work out that budget in the next 24 hours and get all the creditor letters (letter A from the templates) out THIS WEEK! Then they may be in a position that they can feel they are regaining some control and they might even enjoy christmas without this huge black cloud over their heads. Remember that putting a little aside for christmas and birthdays etc. each month is a perfectly valid item on their budget too - and don't skimp on things like food and be realistic. if they smoke, make sure you budget for them - quitting during the initial stress of this is a bad idea (CAB told me that!) Make sure the budget is realistic because they WILL have to stick to it and if you've not been then you will come unstuck.

[The GodMother]

yet another good post from alexteh.

 

I would follow alexs advice and see if your parent will accept your help.

 

If they wont apply for there credit referance files then you do it just make sure you have all the correct info.

 

Make sure you cca everyone and i mean everyone regarding this. If necessary S.A.R. everyone aswell this will give you info on charges etc.

 

Just do what you can for your parents but i would advice taking over there finances as they really do need the money sorted out.

 

Maybe they should also do what alex did and move to rented accomidation and sell the house. I know this might sound bad but they could then use the money they get for the house to pay off some of there debts and they then wont be risking losing there house anyway.

[gizmo111]

Your parents cannot continue leaving this situation as it is.... the interest is making the problem worse. They need to itemise how much is owed on which accounts and go from there....

 

It sounds to me as if £200 a month is way above the amount they can genuinely afford to pay on the card you mention.... so I would suggest contacting this particular creditor with an Income/Expenditure breakdown, stating that they can no longer afford to maintain payments as they are at the moment, offer token payments of no more than £10 a month and request that interest be frozen on the account.

 

As for an IVA, I personally wouldn't touch these with a barge pole, but that view may not be shared by others on here....

 

The income and expenditure is an absolute must and has been said on this thread sooner rather than later.

IVA's are suitable for very few people, most of them fail because they are too restrictive by far, and although we don't have the full figures I doubt if your parents finances would be stable enough (the mortgage repayments increasing etc)

 

an iva is a voluntary agreement between you and your creditors to pay them so much each month. you need to owe ova £15k but i dont no if this includes mortage.

.

 

It wouldn't include a mortgage on the property they are living in, but could include a shortfall on a repossesed property.

 

Personally i would follow alexteh advice and sort this out for them. If they wont apply for there credit reports then do it for them.

 

Obviously this would have to be done with their permission, but it is better if they sit down and work out a liveable budget with your help as needed, as they are the ones that have to live with whatever financial decisions they make.

 

Seriously, no matter how bad it seems, there are tons of people in a worse situation - myself included a few months ago! By the sounds of it, the credit card balance is chock full of illegal charges so it may end up that they owe your parents money even! Bank charges are probably similar but it's all up in the air at the moment but they should still start the process of reclaiming these too!

.

 

A few decent claims could mean they have some money to make full and final settlements to get rid of the debt or get your dad the car he needs.

 

 

If they wont apply for there credit referance files then you do it just make sure you have all the correct info.

 

Make sure you cca everyone and i mean everyone regarding this. If necessary S.A.R. everyone aswell this will give you info on charges etc.

 

Just do what you can for your parents but i would advice taking over there finances as they really do need the money sorted out.

 

AT the end of the day the relationship they have is more important than money, and I wouldn't recommend doing a thing that your parents don't know about or feel comfortable with.

 

Also - how much equity have they, how big is the mortgage?

How old are they

Are they both employed/retired

Have they any pensions etc that will have lump sum payments in the next few years.

[PriorityOne]

 

Maybe they should also do what alex did and move to rented accomidation and sell the house. I know this might sound bad but they could then use the money they get for the house to pay off some of there debts and they then wont be risking losing there house anyway.

 

I wouldn't recommend going down this road.... this is usually part of the ('phone) bowlarks they try and tell you in order to get increased payments. I had that little gem said to me countless times (during the days when I spoke to them on the 'phone) in an attempt to get me to admit I owned property.... which I always denied, of course.... They don't have the right to say such things... it's bullying, plain and simple.

 

The only time your parents would be at risk of losing their house is if the creditor went for a CCJ, followed by a property charge, followed by an Order of Sale.... all of which can be challenged anyway. If they were to go for a CCJ for example, this could be challenged on the grounds of unlawful charges being applied to the account..... assuming they have a CCA in the first place ! Without a CCA, they can't enforce the debt at all. If they do have a valid CCA, then your parents can re-claim charges and make regular payments based on what they can afford.... which would challenge any "right" to go ahead with a property charge anyway.

 

[alexteh]

I wouldn't recommend going down this road.... this is usually part of the ('phone) bowlarks they try and tell you in order to get increased payments. I had that little gem said to me countless times (during the days when I spoke to them on the 'phone) in an attempt to get me to admit I owned property.... which I always denied, of course.... They don't have the right to say such things... it's bullying, plain and simple.

 

I wouldn't necessarily recommend what I did either - I was in a very specific situation where I'd fallen for the whole "take out a secured loan" thing - in fact I had 2 seperate secured loans and a mortgage - and was in the situation where I couldn't afford to live and pay the mortgage and the secured loans and the house was worth less than the loans secured on it (negative equity). By handing the keys back, I got about 3 months effectively living there for free until they completed the legal side of repossession and during that time I just defaulted on my 2 secured loans too and built up enough cash to pay the deposit on a rented property. When the house was sold, the mortgage company got all their money, the first of the secured loans was almost entirely paid off and the 2nd I negotiated to an unsecured loan over 25 years with affordable repayments (basically as there was no property to secure on they had no choice). It was a scary time but the moment I handed the keys back, a huge weight lifted and I've since found CAG and am dealing with all my unsecured debts.

 

I just wish i knew then what I do now.

[missmoneypenny1]

thanks all for your valuable advice. I think I am going to go with the CCA approach, I am not too sure if its worth the nice approach first by filling in expendure forms and asking them to freeze interest with an amount they can afford to pay each month. I just cant see the creditors agreeing to this. I am thinking of CCA ing all of them in the hope they cant provide and agrfeement, I am not trying to avoid their debts in anyway but in a desparate situation if there is no CCA then they can nill the debt. apparently creditors can still add defaults if the debt is unenforceable, i have been looking into this for several months and spoke to lots of different people?? consent apparently can be express consent and does not always have to be written ??? either way id rather get it over and done with now, if they default them that would fall off after six years if the debt is unenforceable. what would happen if a debt was valid and they defaulted on it, but had agreed to pay them say 50.00 a month, would the default last untill the account had been paid or would it fall off after six years?

 

my mum doesnt work at the moment she got made redundant, didnt get a pay out as she wasnt there very long. my dad works full time, he has a good job but not enough money to sustain all their debts. my mum is looking for another job but she needs set hours with school runs etc.

 

I will not do anything without there say so, i really need to see their vredit report to see what is on there and exactly who they owe money too.

 

I have told them this is the only way but they are really scared and dont want me to do it. i have told then they can not continue as they are, paying 200 a month on a card and only paying 20.00 off it as the rest is interest !! plus the rest of their debts!!

 

i agree, that we need to prioritise debts and have a look at the none major important ones and see what we can do with them. I think they may have to put up with a high mortgage rate but hopefully we will sort out the other debts instead.

 

i realise this is going to be a long process, they must have charges all over the place that they can claim back. i mannaged to get them six grands worth of bank charges back and i want to do it for all their other debts, however they are too scared of upsetting creditors by sending threatening letters !!! they would only allow me to send a nice letter to the bank saying that they felt they should be refunded !! anyway i got them the money back without threatening the bank luckilly !

 

i wish i could help them but i cant, it has taken me a long time to get myself sorted and out of debt and i never want to go through that again, plus my partnet wont allow me to cos he says we wont get the money back and more importantly we can afford to do that.

 

i think CCA is the only way.

 

what about a DMP - could this help them? and how does this affect them and their credit in the future??

 

thanks everyone

[The GodMother]

Dont worry about what your partner has said abput you not getting your money abck. It is only £1.00 for each postal order and £1.04p to send summing buy recorded delivery. Any way have you borrowed money off your parents b4? if so look at it this way you will be paying them back.

 

Your partner should understand how hard it is to get back on your feet as you have been threw it.

[The GodMother]

its best not to do a DMP until you have all the info but even then it may not be the best thing for your parents. Get the CCAs off in the post BUT DON SIGN THEM just type your name, eg from Miss A Smith, that way you will no no credit agreements will be fake and your parents wont need to worry more.

 

If u need any more help just ask.

[missmoneypenny1]

Thank you. my partner meant he didnt want me to start drawing money off my visa to help out as he was worried it would end up that we were also in debt and couldnt pay it back. I would help my parents out in any way I can but I cant afford to finnancialy so i will do it the CCA way instead and sorts the creditors out for them!!

 

Thanks for your help everyone I am sure I will have lots of questions along the way !

[The GodMother]

even if u just pay for the ccas and postage i am sure u will be helping them out tons as they wont have to find that money.

[The GodMother]

i understand were ur partner was comming from but i am sure that if it was his parents he would want to help. talk to him and say that u just want to get the£1.00 postal orders, which cost 45p, and postage for the ccas then he might understand. i did not mean u start paying there debts just giving them the freedom to get the ccas off to there creditors would be a lot of help to them.

[alexteh]

Thank you. my partner meant he didnt want me to start drawing money off my visa to help out as he was worried it would end up that we were also in debt and couldnt pay it back. I would help my parents out in any way I can but I cant afford to finnancialy so i will do it the CCA way instead and sorts the creditors out for them!!

 

Thanks for your help everyone I am sure I will have lots of questions along the way !

 

Good luck and if you have any questions ask away

[miss muppet]

Well done MissMoneypenny, you and your partner are quite right not to go into debt yourselves to help your folks out and I'm quite sure they would not want this either, they should be very proud to have brought up a daughter who is so kind, thoughtful and non-judgemental, it might mean lots of work but the way you are going is definitely the right one. As has been said don't sign the CCA requests and remember the time limits i.e. 12+2 working days when they can stop paying if they don't provide the necessary and then further 30 calendar days before creditors are in criminal default, oh and when they start ringing as they surely will don't speak to them ever, just say "in writing only please".