Struggling with debt? Ask a debt advisor a question

Di_B wrote: »

Hi.

My friend has got himself into a lot of debt over many years. Now I am helping him he is slowly getting sorted out, but things keep coming up that he hadn't told me about!
There are a couple of issues, that we could do with some help with?

1. He has been getting charges upon charges from his bank for unauthorised overdrafts. There are still direct debits bouncing.
I have arranged to go in to see/review his account at local branch. See if we can reduce charges this month/cancel DD's.
Is it worth cancelling this account? (I think so as it is a new start). If so, should he shut the account down, or ensure there is enough money in there to cover all charges and overdrafts (this would leave him just about £100 for the month).
Thinking of getting a basic barclays account for him due to low charges etc just in case!
Whatever happens I will be trying to get some of those charges back for him as well once I collect all the info together.

2. He had a loan with Welcome. Although they no longer exist, a 3rd party bought his debt and there is about £2.5k outstanding.
If this loan had a PPI agreement attached, would he be able to reclaim for the PPI against the 3rd party? Even if it just cleared the debt it would really help.
I would assume they would have details of the loan if they are collecting on it? We have no details and he is not sure if PPI was paid or not. This is for a debt that is from 2002-2004ish? (Note the car involved has been scrapped, so there is nothing securing this loan)

Many thanks in advance for any help.

Hello,

Thanks for posting. It sounds like you're doing a great job in helping your friend out.

Changing bank accounts can be useful to create a psychological break and have a fresh start. On a more practical level, it's better to have an account with a bank you don't owe money to as it means there's no risk of the bank taking money to repay their debts.

If you're friend can afford to clear the account in one go and close it down then that reduces the risk of further charges. If it's going to leave him with too little money to live off then he could change to a new bank and then repay the overdraft by installment like other debts. This is much easier to arrange when income is being paid to a different bank account.

The articles on the main MSE site are brilliant for help with PPI stuff. You can read more here: http://www.moneysavingexpert.com/reclaim/ppi-loan-insurance-vwo002#faq. I've looked it up and it seems that the further back PPI goes the harder it is to claim but it's still worth trying regardless of how long ago it was. If the original firm has gone bust then it's possible to claim back through the Financial Services Compensation Scheme (more info on this if you follow the above link).

I hope this helps and wish your friend good luck from me with getting these debts sorted out.

Kind regards

James

safcjohnny wrote: »

Hi, I posted on here last week and was wondering if someone could comment on my situation.

I’ve been looking into DMP’s & IVA’s and would be grateful for any advice you can offer.

I owe about £31K (four credit cards, a loan and overdraft) and have reached the point where even making the minimum payments every month is now a major struggle and I’m not left with anywhere near enough money to live on. Recently it’s got to the point where I’ve been having to miss a months payment on some of the cards so that I can scrape by. This obviously incurs late payment fees and over limit fees and as a result my credit rating must be zero. Currently all payments are at least up to date but all the cards are up to or close to their limits. I’m not blaming anybody else, this is all down to my bad money management in the past, I’ve seen this day coming for a while now but have buried my head in the sand hoping something (what, I don’t know!) would happen to magically bail me out.

My background is that I split from my partner about two years ago but still pay some of the household bills and pay her maintenance monthly for our two kids (aged 9 & 15). I haven’t formally moved out of the house but haven’t lived there since 2011. I currently rent a room from a friend and contribute towards the utility/food expenses there. The house with my ex partner is owned outright as tenants in common (50/50) with no mortgage, I wanted to remortgage in 2012 to clear my debts but was advised by an IFA that I couldn’t do this without the agreement of my ex partner. Originally she agreed but after months of deliberating she told me she wasn’t prepared to do it despite my reassurances that I wouldn’t default on the mortgage, I don’t suppose I can blame her given my track record. I’m 48 in regular employment earning £28K per year and have been in a local government pension plan for 30 years. I really can’t see any other way to begin to clear what I owe as the interest I’m paying is crippling me. I’m wondering specifically if me owning half the house, even though I can’t get at the equity in it, will affect my chances of a successful DMP or IVA.

Any advice would be very much appreciated – I’m desperate.

Hello,

Thanks for posting.

I don't know how much the property is worth but I'm assuming that your share of the equity will be a good bit more than the total amount of your debts. If this is the case it's very unlikely that your creditors would agree to an IVA.

An IVA involves getting your creditors to agree to write some debt off and they aren't going to want to do that if they know you've an asset that's worth more than your total debt (even if you can't actually realise that asset at the moment).

A DMP could be a realistic option for you though. As there is nothing legally binding with a DMP, you don't have to disclose details to your creditors about valuable assets so the property isn't an issue.

All a DMP really means is that a third party negotiates lower payments with your creditors on your behalf. We provide them free of charge when they're the right thing to do. I'd recommend that you get in touch with us and we can have a look at this for you (as well as double check IVAs as a potential option).

The first thing to do is visit our online debt advice service Debt Remedy (http://www.stepchange.org/msehelp) to help you find a solution to your debt problem quickly.

Debt Remedy will assist you in completing a financial statement with information on your household, employment, income, expenditure and debts. From this the service will automatically determine your options.

To help you fill in the form, it’s best to gather together information about:
• Your income
• Your expenditure
• The creditors you owe money to

You’ll receive a downloadable advice booklet providing a tailored solution for you based on your current circumstances and advice on ways you may be able to improve your situation.

If you’re not confident with computers or would like to speak to an advisor then you’re welcome to ring our Helpline on 0800 138 1111 (free including from mobiles). We’re open Monday to Friday 8am - 8pm and Saturdays 9am – 3pm.

If you phone us it may be possible to refer you directly to a debt advisor for immediate advice. Alternatively, we will arrange for an appointment to be booked at a time convenient for you.

Kind regards

James

chris86542 wrote: »

Hi all,

I am currently not in the best position regarding finances due to a big career move. This means that at the end of every month I'm just about breaking even on my finances and often I'll go over my overdraft by about £50-£100. I know this is my own fault however one problem I have is that the bank keep charging me about £50-£90 every month when it happens and it usually gets set to come out on the 13th. For me this is absolutely crippling because it doesn't really give me the chance to save as these charges are hitting me most months.

Is it possible for me to ring the bank and ask them to delay the charges for 1 month so it gives me a chance to straighten out my finances so I'm in a healthier position to pay it the next month? Otherwise they are pretty much helping to kick me whilst I'm down and prevent me from getting up.

Any advice would be really helpful!

Many thanks!!

P.s. Could someone please let me know how I create my own thread because at the moment I can't find it anywhere.

Chris

Hi Chris,

Being honest, I think it's quite unlikely that a bank would delay their fees for a month. These things tend to be run through automated systems, so when you ask there's a good chance you'll get a "computer says no" kind of response. Don't let my cynicism stop you though, as there's no harm in asking.

An alternative, which might give you a better chance of success, would be to try to get some charges refunded. There's loads of good advice on this page: http://www.moneysavingexpert.com/reclaim/bank-charges. But my thoughts are that you could argue that it's the bank charges from previous months which have lead to these new charges.

If you can convince them to refund the new charges before they're taken it'll help you break out of this cycle of overdraft charges.

It might be worth getting some longer term advice about your finances. The trouble with your bank could be a sign that you need a longer term debt solution or it may be that it's just a short term problem.

We can help you work this out. The first thing to do is visit our online debt advice service Debt Remedy (http://www.stepchange.org/msehelp) to help you find a solution to your debt problem quickly.

Debt Remedy will assist you in completing a financial statement with information on your household, employment, income, expenditure and debts. From this the service will automatically determine your options.

To help you fill in the form, it’s best to gather together information about:
• Your income
• Your expenditure
• The creditors you owe money to

You’ll receive a downloadable advice booklet providing a tailored solution for you based on your current circumstances and advice on ways you may be able to improve your situation.

If you’re not confident with computers or would like to speak to an advisor then you’re welcome to ring our Helpline on 0800 138 1111 (free including from mobiles). We’re open Monday to Friday 8am - 8pm and Saturdays 9am – 3pm.

If you phone us it may be possible to refer you directly to a debt advisor for immediate advice. Alternatively, we will arrange for an appointment to be booked at a time convenient for you.

Kind regards

James

p.s. If you go to the main Debt Free Wannabe page there's a bluey/purpley box that says "new thread" just under "Debt Free Diaries".

Quarry wrote: »

Thanks James.
I would be happy to be able to pay my debts when my house is sold, rather than being threatened with uncertainty. I don't expect it to be sold until I die. I have no depenants and the likely recipients of my estate could predecease me. Why do I need equity in a house when I'm dead, rather than financial security whilst I'm alive?

If I understand correctly, a charging order would mean that my debt would become a secured debt and the creditor could apply to have the house sold, so I would still be at risk of losing my home, however small that risk? If they forced a sale, would they be able to sell at less than market value, bearing in mind that I have a low mortgage and I do not have, and am never likely to have, any mortgage arrears?
Thanks.
Q.

Hi Q,

You're right, there would be a small chance that the house might be at risk if you had a charging order (though the creditor would have to convince a judge that the house should be sold).

In the very unlikely event that there ever was an order for sale then it's likely the lender would try to get a decent price but perhaps not the full market value. I don't remember ever speaking to someone who's had this happened personally but I've spoken to many people who've had houses repossessed by their mortgage company and the house is usually sold for less than the full value but not substantially less.

Hope this helps to clarify things a bit.

James