Helping a family member out of debt...right decision?

Rufio · 12 August 2005 at 4:47PM

Hello

I've been a lurker on this forum for a long time and was a member before the board was upgraded. Anyway I am very impressed with the amount of support on this forum and I've never felt the need to post anything up until now!!! I could really do with some help and advice as I'm not sure if what I have done is the right action.

My father is in a lot of financial trouble. He owes around 40000 pounds to various credit cards and loans which he has not been able to pay for the last few months. He has also borrowed against the house over the years and the final straw was when he borrowed 40000 and paid it to a property company which promised him riches but in reality took off with his money!!!!. This latest loan has taken him over the edge and he can barely afford to pay the mortgage on the house never mind the bills!!

The mortgage is 1000 and his household bills alone are 299 a month(not including credit/loan bills)
His income is 1200!!!!!

So the no brainer part is to sell the house and get a smaller one to reduce the mortgage payments right? Well for a start he has bad credit, he is 72 years old and the equity in the house is 23000 (if it makes the value price). He can get another mortgage but needs a 15% deposit due to his age. So on a 100K house he would need 15K...the trouble is.....

I have taken out a loan of 10000 for him to settle with the credit card companys, pay mortgage arrears and do some home improvements for the sale of the house.
While I live in the house I agreed to pay the loan repayment in exchange for rent. When the house is sold he would be able to manage the loan repayment because his bills will be reduced plus any money from the equity could go on the loan. The problem is if anything happens it's my credit history that gets affected and i'm the one that gets into trouble. I still have 6.5K of the loan in my bank account so that he can't squander it but with what has happened I really feel like not giving him any of it and letting him declare bankruptcy, losing the house and for him to live in rented accomadation for the rest of his life. I feel so angry and bitter towards him...how can he be so stupid? at his age he ought to be enjoying the easy life.......

I myself am finicially unstable and was looking at moving away and starting a new life before this happened as I'm very unhappy with my current situation....now I feel like my dad is going down and he's taking me down with him.....

I am now regretting taking out the loan and feel that he should sell the house, declare bankruptcy and live in rented accomadation instead of buying a new property and for it to happen all over again....

By the way he has written to the credit card companies offering to settle 15p to a pound as that is all he can afford (out of my loan)

What shall I do? Do you think the credit card companies would settle? What would you do in my situation? I'm really at my wits end at the moment and it's not even something of my own doing..... I'm so distraught with worry, cry myself to sleep and feel suicidal at times.... any help would be much appreciated!

rchddap1 · 12 August 2005 at 4:54PM

Firstly you are not alone. There'll be lots of people here soon to help you out and give you advice. My partner's mother is in a bit of a pickle and we agonised over whether to help her or not. After making a few gestures we have decided to leave her to it.....even though this is painful to do. SImply put she hasn't realised how much of a problem she has and she won't take any steps in order to solve the problems. All we can do is sit here and watch her sink.

Besides, to be honest even if we did want to help her we couldn't get her out of the mess that she is in....even if she did want to sort things out.

Blade26 · 12 August 2005 at 4:59PM

I dont feel qualified in any way shape or form to advise you on whats the best solution, but what I will say is that 6 months to the day I felt very much like you did about my Mum. I discovered purely by accident that she had debts of arond £19k and had been burying her head in the sand, I confronted her with this and was extremely angry, p'eed off at how stupid she had been etc etc, all the things you are probably feeling now.

I have to admit that looking back, just because they are older doesn't necessarily mean that they are wiser, infact its often very much the opposite. I dont know if its a generation thing, and the fact they when they were our age (I'm mid 20s) credit wasnt so readily available, and that now it is you often get caught in a vicious circle and it all spirals out of control.

Dont really know what else to say other than 6 months ago, I felt exactly as you did, and now yes I still get angry about it but with some rational thinking and a bit of family support - (any siblings willing to help you) you can surely come to some sort of arrangement/agreement that suits everyone.

I sound so old, but cherish your Dad for all his faults (and debts!

) cos he's the only one youve got

PM if you like

xx

Apple_2 · 12 August 2005 at 5:34PM

Rufio wrote:

Hello

By the way he has written to the credit card companies offering to settle 15p to a pound as that is all he can afford (out of my loan)

What shall I do? Do you think the credit card companies would settle?

Can't offer any advice on the main questions you face. But on the above offer I'd say no. I did the same - my O/H has debts, I offered about 20% in full & final settlement. Explained he wasn't working, had no money, had no assets, hugh creditors including the Inland Revenue ( who take priority ). Was a waste of time. One c/card would only talk at 80%, second at 75%. The others weren't interested in any !!!!!!.

I've learnt from this site, that lower offers are only negotiated when debts get sold on to external debt collectors. We haven't got to that point yet so can't really comment further.

Best of Luck though.

greencat_2 · 12 August 2005 at 6:57PM

Personally I'd be tempted to say that he should sell the house, clear his debts as much as poss and rent. It could turn out far less stressful for you and him as he wouldn't have to worry about paying off a huge mortgage, repairs to the house etc. There's nothing wrong or shameful with renting - lots of people downsize at his time of life.

It's never easy when a family member is in debt. My missus had run up debts of around £10K (mostly through being a little naive rather than stupid) before I met her. And she had no chance of paying it off (cancer meant she had a lot of time off work over the last few years). Most of my savings at the time went into paying it off - but I've never regretted it.

We're married now, shes had the all clear and we can start afresh. Good luck mate - I hope it works out for you and your dad.

Rufio · 12 August 2005 at 11:15PM

Thank you all for your replies. It means so much to be able to read other people's advice and suggestions and that I am not the only one who has this problem makes me realise that I am not alone....thank you!

I'm really thinking that he should sell the house, pay me the money back for the loan plus 2K I lent him from my savings and then rent. At least that way he would have plenty of income left to pay off the debts. At least then if they try and force him into bankruptcy he wouldn't have a house to lose. The sale of the house has been overdue as it's a 4 bed with only 2 people living in it. It's a shame that it has to be sold in such circumstances!
I'm also glad that I insisted on him giving me 6.5K from the 10K back because judging by what Apple has said about her partner the C/C companies probably won't settle and if he kept the full amount he would have squandered it. The only thing I am worried about is if he decides to buy another property with those debts following him....he might lose his home if they force him to go bankrupt! SIGH!

*Musn't forget he's my dad...and he's the only one I've got* thanks for the reminder Blade 26!

[Deleted User] · 13 August 2005 at 1:21PM

You're DAD is the one who needs to ask for help. How did he run up such huge debt? Could it happen again?

You should NOT be paying off his debts. Especially when you admit to being financially unstable yourself.

He needs professional advice from a debt counsellor and should seek this ASAP. He can see an advisor in strict confdence at his local CAB, free of charge - where they will, if he would like, take on his case, deal with his creditors and take the heat off.
They will help to get straight - but the underlying concern I have (without knowing the full story) is that YOU are taking on his debt when you shouldn't be.

How do you know he has stopped spending?

Helping a family member out of debt...right decision?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free