Help me sort out my Parents Debt Crisis

andyse13 · 13 July 2007 at 12:39AM

My parents called me on Tuesday through sheer desperation as the have a repo order on the house and are both due in court next Thursday. This was a total bolt out of the Blue and i am deeply upset for them. I now need to help them take control to undo the terrible mess they have got into.

The mortgage is currently £125k with 9k arrears. (amazed at this - they originally morgatged the house for 32k 15 years ago!!!)
They have an additional £165k of outstanding debt consisting of secured and un secured loans, credit cards, car loan etc etc. Most are currently being unpaid or minimum payment, intrest accruing at an alarming rate and court notice's coming out of their ears. They are scared to death and have apparently been sitting at home for months not answering the landline to anyone - I sat their this evening and it rang at least 10 times. Whilst I do not understand how the system can allow them to fall into this much debt (mostley over the last 2 years as my dad set up his own buisness which is clearly failing), I despeatley need to help them out in any way I can and save the family home until we can sort this out.

I have tonight discovered they went to a company "DEBT FREE ME" who got them to sign an agreement to hand over £200 a month to them for the next 3 months (from what I can gateher only £30 of this will go towards paying the debt) I have read the small print and it does not have any cancellation clause and states "The client will be legally bound by this agreement upon signing it" CAN THEY DO THIS? I thought most agreements have a 14 day cooling off period? I would rather see it cancelled immediatley so I can go to one of the free ones as the above company have not offered any help to them regarding the mortgage or court action. The other problem is the company have taken all my parents latest statements etc so I cannot get an exact figure of Debt to take elswhere.

The main priority is to stop the repo order - What would anyone reccomend? They failed to submit the previous summons where they have the oppotunity to state current situation. They have however offered to make the mortgage payment and an additional £200 this month (Where they will get this from I have no idea!!) The bank said this will not stop the court action.

Should I get them a solicitor? (I dont have much money but could push to it if I had to)
Plead with the mortgage company? I think it has gone to far for this
Try and apply for IVA/Bancruptcy before next week?

I have no idea what my parents will do if repo - They have no where to go (I would of course take them in but i live to far so they would have to give up there jobs etc)

I would welcome any advice - The wolves are at their door and I desperatley need to reassure them I can sort it out and they will not loose there home

BTW - My dad is 60 and my Mother is 54 - I am terrified for their health!!! There income is not brilliant either at the moment - Dependin on my dads buisness I worked it out to be around £1,700 nett per month

postingalwaysposting · 13 July 2007 at 1:02AM

welcome andy, i am sure lots of people will have advice for you and your parents but just wanted to inform you that it may be the morning before you have any replys... i dont have any advice sorry but i will follow your progress, hope you find the light at the end of the tunnal... take care

TTMCMschine · 13 July 2007 at 1:26AM

Hi.
That is an enormous amount of debt. The worry I think is that not only are there mortgage arrears, but also some of the loans are secured.

I think you'll need to post a full statement of affairs & breakdown the loans into secured & unsecured, outstanding balances, interets rates, etc.

How did they manage to run up so much debt? Surely it can't have been just for a business over the last 2 years, what is his business?

Are there any possessions that they can sell quickly to raise money?

andyse13 · 13 July 2007 at 1:47AM

Hi

Thanks for your reply.

I to am amazed my dad had been able to run up such debts over what seems such a short period of time.

I will post as full a breakdown/statement of affairs as quickly as posssible as soon as I have the info. i may have to estimate some as the debt recovery firm i mentioned have most of their recent statements.

My dad set up a one man minibus businesss 2 years ago (despite the families plea for him not too). Income as you can imagine is not consistant and can be lower than his mortgage payments. I think reading between the lines, he has panicked, applyed for credit cards to pay for monthly expenses and loan on top of loan to keep his head above water. I am so disappinted they did not come to me sooner - But here we are and I cannot change that

. There are other issues - My mother has a fruit machine addiction, they are both drinking heavily and my dad has never been good a managing finances. To cut a long story short my mum refused to have anything to do with the business from day one as he never consulted her - He has therefore hidden his problems from her through shame/pride.

You would think with all the debt the house would be full off valuables - There is nothing of value accept the odd dvd player, PC, Laptop etc but nothing that would make much of a difference quickly. I dont even think they have enough cash to offer the courts to pay the mortgage this month either

I have convinced my dad he will have to give up the business and find employment to provide a regular income and fast!!!! However, as he has only half paid off the bus he could sell for 8K but still owes 16k on it!

I do not know how I am going to cope with this - I am stressed already since finding out Tuesday and not slept a wink!!! I welcome advice from as many people as possible

LouBlue · 13 July 2007 at 2:01AM

You poor thing. Its supposed to be us that give our parents stress..not the other way around. They are lucky to have you.

I can't help I'm afraid but just wanted to say, hang in there, and I am sure you will get a lot more advice in the morning.

andyse13 · 13 July 2007 at 2:40AM

I list below what I have found out so far - I will amend and add missing info as I get it:

Income:

Mums Wages £850
Dads Income £1200 (after all business costs. Also variable)

Total £2150

Costs:

Mortgage £1165 7.25 Variable (cant switch due to arrears)
Gas £73 (due to arrears of £200)
Electric £40
Water £18
Council Tax £115
TV Lic £11.61
TV/Phone/BB £54
Food £250
Cigarretes £212
Alcohol £86
Travel £69
Bank Charges £20

Total £2113.61

Income Shortfall before below debts paid £37

Debts (are you ready for this!!!)

Abbey National £23262 Secured Loan
Bank of Scotland £2702 Credit Card
Barclaycard £1077 Credit Card
Capital one £1600 Credit Card
Citi Cards £1855 Credit Card
City £2600 Credit Card
GE Money £376 Credit Card
GE Money £693 Store Card
Lloyds TSB £22400 Loan
Lloyds TSB £5000 Overdraft
Lloyds TSB £14983 Loan
Lloyds TSB £10300 Credit Card
MBNA £3405 Credit Card
Talk Talk £159 Mobile
Yell £542 Advertising Fee
Mini Bus Loan £15000
Mortgage arrears £9500

Total Debt £102000

Arggghh - Not a big as I thought, must of calculated my initial thoughts of this being £165k - Should of double checked on the calcualtor and also mortgage arrears as this is included in the £125 - Forgive me - i am tired - Still a huge Debt though

I will add more details in morning - Going to try and get some sleep - I have missed off some, will look with fresh eyes tommorow

Crown · 13 July 2007 at 6:02AM

Hi Andy and welcome,

The first thing thing they need to do is get out of this contract with this rip off company and contact either the CCCS or Payplan who offer exactly the same service or better and are totally free to use. This will mean that all the money that is owing will go totwards the debt.

Things do look rather bleak from the SOA you have posted but it doesnt mean that they are going to lose the house but I would suggest that they need to move pretty quickly to get some type of plan in action so I would try and get them to contact the CCCS today and make an appointment to speak to a debt counseller. They will take all the info and outline your best course of action.

A few things I would suggest why you are waiting for an appointment are to open up a new basic bank account without credit facilities with a lender/creditor they do not currently hold any debt with. If things go wrong the banks can and will raid any other accounts they hold with them. I found this out to my cost when it was to late.

Once you have opened the new bank account get all the wages redirected to this account as you will then be back in control of werethe money actually goes. This is important as otherwise the current bank can just swallow a months income and leave you with nothing to live on.

I would then stop paying everything but priority debts. the priorities are:

Mortgage
Secured Loans
Council Tax
Gas/Electric
Water (although they cannot cut you off)

Then to the other creditors you need to write to them and let them know that you are in financial difficulty and see if they will freeze the interest ect. I would again wait until you have spoken the the CCCS as they provide template letters and the creditors are more responsive when the CCCS are involved form my experience.

If possible just make token payments of £1.00 to each of the creditors why this is being sorted. It may not seem like much it will still show up on there systems as payments received and will go in your favour.

The bottom line is if there living on credit (Overdraft, credit cards ect) they need to stop use of all credit immedialtey as they are digging themselves deeper into debt. There are more steps that can be taken but this reply is already quite long.

I wish you the best of luck with it and keep us informed.

Crown · 13 July 2007 at 6:09AM

Sorry a few more questions.

Can you find out what are the secured loans and also the interest rates of all the cards/loans concerned?

Is there any equity in the property?

Is the MiniBus used for the business. canthis be sold to help clear some debt?

When ws the agreement taken out with this debt company. You may have to move fast get out of the contract. you may want to seek advice from your local CAB. I hate these vultures who take advantage of people in desperate situations (I remember them circling when I was at crisis point!)

andyse13 · 13 July 2007 at 6:52AM

Hi

I have posted an application in my mothers name for a basic bank account with the Halifax. If the refuse I have a redundant account which she can pay her wages into as I think long term I need to control their money for them. Should I also move the priority debt to this account? What about my dads current accountg - He has returned direct debit fees all over the place - should I try and cancel them online today and get the letters to all the companies to explain? I am hoping I can salvage enough money to make the last missed payment on the mortgage so at least the court on Thursday can see they are trying.

I will get the info on the secured loans etc and post later. However, i doubt there is any equity: Current value I think is £160,000. Mortgaged in total to repay £125,000 + 9,500 arrears. The secured loan was £30,000 - will look for remaining bablance but as quite new and with the interest i think were already into negative equity situation.

The minibus is still being paid for on finanace - Balanace around £16k. Due to recent damadge probably only worth £8k. Would they get into trouble if they sold this pretty quick to pay the mortgage and urgent debt instead of repaying the finance?

I will be ringing the css myself at the strike of 8am when they open. I am hoping they will give me some initial advice on their behalf - Mainly on dealing with the repo in the first instance. I do hope they help me as my parents can hardly string a sentance together at the moment due to the stress/fear/shame of it all

With regards to the rip of contract, whilst the small print has no mention of it i will be also calling them today to halt the whole thing, return importnat papers to them immediatly - I also need to cancel the "standing order" they so cleverly got them to sign - I am so mad at this company!!!!!

Again, thank you all so far for your advice on this - It is invaluble at the moment as I try and salvage this whole mess for them.

x

Crown · 13 July 2007 at 7:37AM

Hi Andy,

With regards to your dads current account he needs to get any income going into a account with a lender they owe nothing to too. I would then cancel all direct debits and set up standing orders from the new account of £1 token payments.

It is important that you set it up as a standing order and NOT direct debit as the banks have the right to change the amount and could empty the new account of the balance. I find opening a account with online banking the easiest way to do this and also it would be easier for you to control as you can log in whenver you need too. as long as you have your parents permission of course

With regards to selling the van and using the money to pay the mortgage they would not get into trouble.

Let me make one thing clear as you start to sort this debt out. the most important thing is the health of your parents. They need to make sure they have a shelter and food. Anything else comes second. The bank mananger isnt going to starve let me assure you.

I know how scary it is owing so much money (I currently have outstanding debts of £167,000 (will come down to around £39,000 once my flats sold!!) and nearly had a breakdown last September before I reeally got involved with this site. As long as they pay what they can afford then nothing can be done immediatley but they do need to make sure they pay there Mortgage and Secured Loans and Council tax.

Also I know it seems like they shameful thing in the world to them at the moment but trust me when I say there are 10s of thousands of people in the same situation and its getting worse. Its for the best they get this sorted out now.

andyse13 · 13 July 2007 at 7:49AM

Thanks for that - Im on the case now - Think i will go with the halifax as they owe them nothing and they have always been good to me.

I will push my dad to sell the van as soon as possible - He needs to find employment first though otherwise there will be next to nothing coming in - I will march him down the job centre this afternoon

He wont like it but its tough - Im gonna have to be cruel to be kind

I am sure I have loads more questions - Will be ringing the CSS company in Ten mins - Wish me luck everyone - Im gonna need it!!

Help me sort out my Parents Debt Crisis

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