Huge debt and retired

LearningtoSave2006 · 18 April 2008 at 2:45PM

I've just had my dad sit down with me and ask me for some help with their finances. He basically wanted to know what's involved in bankruptcy as I myself went bankrupt nearly 4 years ago.

Anyway - it tranpires that my parents have over £70k of debt between them, and in the last few years they've been paying a small pro-rata amount to each lender totalling approximately £73 a month.

Now my dad is 68 this year, and my mum will be retiring soon and neither or them want this debt hanging over their heads - or rather my dad doesn't, as it would appear my mum just passes it to him and leaves it for him to deal with.

They're both extremely reluctant to go bankrupt, an IVA appears to be a waste of time and none of us have a reasonable lump sum available to offer as a full and final settlement across the board. Would it be possible to offer full and final settlements to one lender at a time (starting with the lowest), or does the offer have to be made to everyone?

If more information is needed then the debts are as follows (these are all approximate figures):

Debt 1 - £10,000 (current monthly payment £10)
Debt 2 - £ 4,800 (current monthly payment £5)
Debt 3 - £ 4,000 (current monthly payment £4)
Debt 4 - £ 8,000 (current monthly payment £8)
Debt 5 - £ 2,000 (current monthly payment £2)
Debt 6 - £ 5,600 (current monthly payment £6)
Debt 7 - £ 3,000 (current monthly payment £3)
Debt 8 - £ 7,500 (current monthly payment £7)
Debt 9 - £14,500 (current monthly payment £14)
Debt 10 - £14,700 (current monthly payment £14)

Any help or advise would be appreciated.

CLAPTON · 18 April 2008 at 3:07PM

need a lot more information

can you post up an SOA for them

do they own any property

currently they seem only to be paying 80 per month on loans of 70,000 ..is this correct?

floss2 · 18 April 2008 at 3:27PM

How did they arrange these token payments? Have they had advice from CAB maybe?

What are their retirement prospects - i.e. any lump sums due, pensions etc.

LearningtoSave2006 · 18 April 2008 at 3:45PM

Unfortunately I don't have an SOA for them, but they told me they can't afford to pay more then £100 a month. I will ask for a SOA though.

They don't own any property.

Yes they are only paying £80 per month on debts of £70,000.

Token payments were arranged by my dad, using forms on the National Debtline website. This was done a few years ago.

Retirement wise, my dad receives three pensions. His Old Age Pension, National State Pension, and a pension from when he was in the services. I believe it totals just over £1,000 a month.

My mum doesn't have a pension, so no lump sums due, and she will just be on whatever she gets from her NI contributions (? I haven't got a clue about pensions and how they work).

fermi · 18 April 2008 at 4:05PM

They really need to actually talk to an advisor from CCCS, National Debtline or CAB.

Given their situation I can see why you mention the bankruptcy option, but it is something that can only be done if you have had professional advice that it is their best option.

Remember that there is the Bankruptcy & Living With It board here on MSE, but even we/they will say to get professional advice ASAP.

CCCS, NDL or CAB will be able to go through all options with them.

CCCS_Alan · 18 April 2008 at 4:22PM

Hi LTS2006

Unfortunately your parents are not the only one people in this situation as a lot of people approaching retirement have not prepared sufficiently for the reduction in income.

Bankruptcy should not be taken lightly as you know, so you do need to emphasize to them the importance of putting together a SOA to allow them to seek advice.
They will also have to be aware that they will have to survive on what income they have coming in, and would no longer be able to top this up with credit as they would need to stop the use of credit completely.

It is best for your parents to seek impartial advice as Fermi has advised and the sooner the better.

You can try our online advice facility called Debt Remedy where you can complete a financial statement and be provided with advice on the best way to deal with the situation. This facility is anonymous unless certain avenues are to be looked into, so your parents may feel more comfortable doing this with your help.

Good luck and keep us informed

CCCS_Alan

CLAPTON · 18 April 2008 at 4:25PM

i think fermi is exactly right.
bankruptcy seems a very real option but they really need to seek professional advice... but from the little info available and in view of their age, IVAs and F&Fs are not applicable and they are never going to pay the debt back.

Debt_Free_Chick · 18 April 2008 at 4:29PM

LearningtoSave2006 wrote: »

They don't own any property.

If they have no other assets then they should seriously consider BR ... but take advice as already suggested.

It's about time they lived their lives without stress & worry. They should cut themselves some slack and consider having the debts wiped out by BR .... especially if they have "nothing to lose". Who knows, in 12 months time they might even be able to have a little holiday.

My heart breaks thinking of folk like your parents - and mine! - who worry and struggle with money in their later years. This is one case where I have no issues with "stuffing the lenders" - something I would normally disagree with, for its own sake - but for your folks, who cares

For heaven's sake ... let them have some peace and enjoyment. Get them to CAB or National Debtline or CCCS.

Let us know what they decide to do if you can

Debt_Free_Chick · 18 April 2008 at 4:30PM

LearningtoSave2006 wrote: »

Retirement wise, my dad receives three pensions. His Old Age Pension, National State Pension, and a pension from when he was in the services. I believe it totals just over £1,000 a month.

Easy to see that the bare essentials of life would run to £1,000 a month ... rent, Council Tax, utilities, food .......

RAS · 18 April 2008 at 4:47PM

LTS

Please do get your parents to take professional advice on their circumstances.

Your dad has obviously done what he could on his own. I am really glad he has now seen fit to take you into his confidence.

Im my mind one issue that may need to be addessed, albeit very tactfully, is that your dad seems to be a bit older than mum and if these debts are joint, if he dies before she does, she will inherit them. it is likely that she will be even more financially challenged.

Rather than struggling for years for repay a tiny percentage of the debt and then the surviving parent have to cope with the distress of bereavement and going BK shortly after, it may well be more sensible to make the break now and have some sort of life together.

As Alan says, they will have to learn to budget very carefully as they will not have access to credit, but you know your way round that anyway.

If they have any doubts, do get them to pop onto the BK sub-forum and have a chat. Most of the folk are lovely. If the odd maverick gets on, they will be put straight. Based on my experience the most likely time for mavericks is Friday night when the boards are quiet and and outsiders get bored.

If you folks decide to go BK, then the folk on the forum will support them practically and emotionally.

my best wishes to you all.

LearningtoSave2006 · 18 April 2008 at 4:50PM

Thank you very much to everyone for your advice. I had initially told my dad to go to the CAB, but said I would also come on here (he's a fan of listening to Martin on Radio 2 and you all really helped me when I went bankrupt a few years ago). I really appreciate your help and advice, and will re-itterate to my dad about going to CAB. I hate the thought of the added stress he must have due to worrying about it all.

Once they have made a decision I'll update. Thanks again.

Huge debt and retired

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