Struggling with debt? Ask a debt adviser a question

Former_StepChange_Richard · 9 March 2017 at 6:44PM

CatherineB wrote: »

Hi
My sister, now in her 50's, has struggled with mental illness since her teens. She has been sectioned 3 times whenever she gets over stressed due to difficulties such as debt. My parents have always been supportive and helped her and paid off her debts. Over the past year she decided to stop taking her long term antipsychotic medication and has since managed to get thousands of pounds back into debt again using 3 store cards and 5 credit cards. My mum has been helping her and so far has repaid over £5000 with still just over £4000 outstanding. My sister has promised that this time she will never get into debt again but she has said this before. Barclaycard have just written to her and now doubled her credit limit from £4000 to £8000! How can we stop her being offered 'credit' in the future so we can avoid all this mess? Shopping and gambling are part of her illness

Hi CatherineB

I'm sorry to hear of your sister's struggle with mental health. I know how hard this can be. It's great to hear that there is such a supportive family looking out for her though.

Stopping a person being offered credit is not as easy as you would think. There are companies that are specifically looking to provide credit to people with low credit ratings and as you may have read elsewhere on this forum, having a high or low credit score is no guarentee that you will or won't be offered credit.

It is certainly worth contacting the organisations she has credit with to see if they will agree to not offer anymore. There's no gurantee of this working, but it is worth asking.

Methods of insolvency (such as bankruptcy) usually come with restrictions designed to limit a person's ability to obtain credit, however, this doesn't last forever and only limits, but does not prevent this.

There is somthing that you may want to explore with your sister which is known as becoming a Deputy of the Court of Protection. You can read about this here. With this in place, you can contact the credit reference agencies to request that they set an arrangement where by if your sister were to apply or be offered credit, the person nominated as Deputy would be contacted before hand to approve it. Again, this won't prevent your sister from being offered credit (and you'll only be notified if a credit check takes place) but it would act as a barrier in most cases.

I hope this gives you some ideas and helps a little. Please let us know if you need anything else.

Richard

Missmich73 · 10 March 2017 at 11:47AM

Looking for some help and advice please :A
My sister passed away in April 2015 suddenly in her sleep, she had an IVA running with £36,000 of debt.
I have contacted the IVA company and they have frozen the IVA until I carry out some investigations and look into the best way forward.
They have provided a list of creditors so I have contacted them individually, 2 of the debts have gone to Max Recovery so as you can probably imagine they aren't budging with the debt, another company has confirmed that my sisters balance with them is zero so this information has been sent to the IVA company and hopefully that will reduce the debt down a little.
My sister left a house that has been paid for through insurance but we really don't want to sell it.
On looking into the IVA only 0.18p out of every £1 paid by my sister has been paid to the creditors....is this legal or fair? People that turn to IVA's must already be in a bad situation and I can't see how an IVA would be a good option?

Former_StepChange_Linsi · 10 March 2017 at 3:36PM

Good afternoon,

Thanks for getting in touch and welcome to the forum.

I’m sorry to hear your sister passed away. We’ll be able to give you some general advice about your sister’s IVA and debts. If you need any additional support you can also contact an organisation such as Cruse Bereavement Care who provide counseling and support for those dealing with bereavement.

An IVA can be a good option for people in debt, as it allows them to make affordable monthly payments over a set period of time. After this set time the creditors will write off any remaining debt.

The fees charged for setting up and running an IVA vary depending on the provider, but it’s not unusual for a creditor to accept 18p out of every pound paid through an IVA.

The IVA should have ended when your sister passed away. If the debts included were just in your sister’s name then you won’t be liable for them now. However, the creditors may expect to receive a payment from your sister’s estate.

An estate is made up of cash (including insurance pay outs), investments, property and possessions.

For help managing your sister’s estate and settling these debts we’d recommend seeking legal advice from organisations such as Civil Legal Advice or the Law Centres Federation.

I hope this helps.

Linsi

Missmich73 wrote: »

Looking for some help and advice please :A
My sister passed away in April 2015 suddenly in her sleep, she had an IVA running with £36,000 of debt.
I have contacted the IVA company and they have frozen the IVA until I carry out some investigations and look into the best way forward.
They have provided a list of creditors so I have contacted them individually, 2 of the debts have gone to Max Recovery so as you can probably imagine they aren't budging with the debt, another company has confirmed that my sisters balance with them is zero so this information has been sent to the IVA company and hopefully that will reduce the debt down a little.
My sister left a house that has been paid for through insurance but we really don't want to sell it.
On looking into the IVA only 0.18p out of every £1 paid by my sister has been paid to the creditors....is this legal or fair? People that turn to IVA's must already be in a bad situation and I can't see how an IVA would be a good option?

AliceBanned · 14 March 2017 at 8:06PM

I have two questions re 2 different credit unions. I am trying to get debt free but it will take me at least another 2 years. As part of this I am repaying the 2 credit union loans.

CU1: I repayed the loan using the savings in the same credit union by increasing payments to the CU until they matched the savings. This is logged on my account but they haven't actually moved the funds over. Should I ask them to do this asap as it has been about 2 weeks and the debt is still sitting there, with enough money in the savings to pay it off? The debt was £1300 so it isn't helping my credit file on top of all the other debts.The interest wasn't particularly low and I'm a bit disillusioned with the whole credit union thing really. Are they really all that ethical?! I get that they are there when often no one else will lend but they are still encouraging borrowing after all, and profiting from it.

CU2: I took out several short-term loans from this credit union as they were very competitive and I couldn't manage my money any better at the time. The last one I took out was Nov 2016 but looking on MSE credit club I realise I took out far more than I realised - about 10 over 2 years! These were mostly between £150-£300 and I repaid them all within 1 or 2 months. It just became a regular pattern but now I have a larger overdraft and use that though I'd rather not have that either. Will the CU short term loans affect my credit file as badly as usual payday loans? I want to increase my mortgage towards the end of this year as I am in shared ownership and I tried a few months ago and was declined. I was told the credit card debt was the reason but am now worried these short term loans made it worse and it will take a while for them to leave my credit file.

I've never defaulted on anything but still struggling to make ends meet as I have high outgoings due to living in the southeast and taking on a first mortgage late in life (age 46).

StepChange_Rachael · 15 March 2017 at 10:27AM

Hi

Thanks for posting.

Firstly to answer your first question, if you have enough in savings with this Credit Union to pay back the loan then it makes sense to use this to clear the debt. Although it’s not advisable in general to prioritise your creditors it’s different with savings and loans with a Credit Union unless you have houshold debts such as mortgage/utility arrears as these always take priority over unsecured debts.

Credit Unions run differently from most in that members run Credit Unions in a not-for-profit way. This means they use their members’ money to run their services and reward their members instead of paying outside shareholders; however they work in a similar way to a business.

Secondly it’s difficult to say exactly what impact regularly borrowing small loans from the Credit Union will have had on your credit file. As you’ve not defaulted on the loans this is positive as defaults will have a negative impact on your file.

It’s important to remember that there are many things that can affect a credit file. Creditors use a credit file to see if it’s a good business decision to lend to that individual. Paying a debt back in full and making the creditor money from interest will be seen as positive.

It’s more likely when it comes to mortgages that you’d be successful in your application if your debt level is minimal.

As you’ve mentioned having a few debts I’d suggest speaking with a debt advisory service like ourselves for free and impartial advice.

By knowing your full financial situation a debt advisor would be able to advise you on the best way forward to become debt free and discuss your options with you.

If you’d like to explore your options you can find our contact details here.

Thanks
Rachael

AliceBanned wrote: »

I have two questions re 2 different credit unions. I am trying to get debt free but it will take me at least another 2 years. As part of this I am repaying the 2 credit union loans.

CU1: I repayed the loan using the savings in the same credit union by increasing payments to the CU until they matched the savings. This is logged on my account but they haven't actually moved the funds over. Should I ask them to do this asap as it has been about 2 weeks and the debt is still sitting there, with enough money in the savings to pay it off? The debt was £1300 so it isn't helping my credit file on top of all the other debts.The interest wasn't particularly low and I'm a bit disillusioned with the whole credit union thing really. Are they really all that ethical?! I get that they are there when often no one else will lend but they are still encouraging borrowing after all, and profiting from it.

CU2: I took out several short-term loans from this credit union as they were very competitive and I couldn't manage my money any better at the time. The last one I took out was Nov 2016 but looking on MSE credit club I realise I took out far more than I realised - about 10 over 2 years! These were mostly between £150-£300 and I repaid them all within 1 or 2 months. It just became a regular pattern but now I have a larger overdraft and use that though I'd rather not have that either. Will the CU short term loans affect my credit file as badly as usual payday loans? I want to increase my mortgage towards the end of this year as I am in shared ownership and I tried a few months ago and was declined. I was told the credit card debt was the reason but am now worried these short term loans made it worse and it will take a while for them to leave my credit file.

I've never defaulted on anything but still struggling to make ends meet as I have high outgoings due to living in the southeast and taking on a first mortgage late in life (age 46).

AliceBanned · 15 March 2017 at 11:35AM

Thanks Rachael. I've spoken to debt charities before and found it helpful though the calculations often suggest a DMP. As I am managing without one I have continued without this as this might affect the mortgage situation in the future. It is hard going though but the debts are reducing and the interest I'm paying now is low. The psychological impacts are difficult but my GP is aware and I'm awaiting counselling.

StepChange_Allen · 17 March 2017 at 9:30AM

AliceBanned wrote: »

Thanks Rachael. I've spoken to debt charities before and found it helpful though the calculations often suggest a DMP. As I am managing without one I have continued without this as this might affect the mortgage situation in the future. It is hard going though but the debts are reducing and the interest I'm paying now is low. The psychological impacts are difficult but my GP is aware and I'm awaiting counselling.

Hi there

Thanks for replying.

I understand that problem debt can cause pyschological impacts so it's good that you've been to your GP to get some support.

With regards to being recommended DMPs, if you are close to the borderline between being able to afford the contractual payments and not, this is in most cases likely to be one of the recommended solutions. If you feel you can just about manage and the minimum payments slowly come down as interest reduces then that's great.

If you haven't used our online Debt Remedy tool before, you could give that a go. It's available 24 hours a day and allows you to fill in your budget and get advice at the end. You're welcome to just use it as a budgeting tool should it help. It can be found here.

Best wishes.

Allen

rainedays · 18 March 2017 at 10:06AM

Good morning all. I really hope someone can help regarding debts to the HMRC I had someone leave a card regarding a debt yesterday so I rang them, and it turns out I owe HMRC about £2000 for not paying self assessment, I am oblivious how any of this works as I have always been employed by an employer. This has come from a spell I was out of work so filled in doing a few hours work for less than 3 months which I declared on the day to tax credits and the day I finished I told tax credits again I paid for my stamp for the three months I worked but it worked out as less than £120 a week so I wouldn't have hit any tax thresholds to pay etc and I took it as read that when the tax credit fella said I didn't need to do anything further that that was it. Now I owe thousands and the collectors said the minimum I could pay back would be £400 a month which they have no chance of getting as I don't have that in a pot. Anyone know where I need to start please??

I am spending 2017 trying to deal with outstanding debts I was doing so well sorted out lots of minor debts into payment plans, clawing down the credit cards then this jumps into the mix and throws my anxiety through the roof ... We reap what we sow I guess

sidewayslook · 18 March 2017 at 1:10PM

Hello,

Please help! I have received a Claim Form for a debt which I defaulted on in 2010. The debt was on a credit card for £7600. I tried to negotiate with them at the time until I got myself back on my feet. Since then I have paid them £1 a month so I believe this does not make the debt statute barred as this is seen as me admitting to the debt - is that correct?

The claim form is saying that the debt was assigned to PRA in 2014 and that since then I have paid them £1300 - which I have not!

My situation is that I am a single parent, working but receiving benefits.

I need to respond by Monday - please advise what my best course of action is.

Many thanks

StepChange_Allen · 20 March 2017 at 9:42AM

rainedays wrote: »

Good morning all. I really hope someone can help regarding debts to the HMRC I had someone leave a card regarding a debt yesterday so I rang them, and it turns out I owe HMRC about £2000 for not paying self assessment, I am oblivious how any of this works as I have always been employed by an employer. This has come from a spell I was out of work so filled in doing a few hours work for less than 3 months which I declared on the day to tax credits and the day I finished I told tax credits again I paid for my stamp for the three months I worked but it worked out as less than £120 a week so I wouldn't have hit any tax thresholds to pay etc and I took it as read that when the tax credit fella said I didn't need to do anything further that that was it. Now I owe thousands and the collectors said the minimum I could pay back would be £400 a month which they have no chance of getting as I don't have that in a pot. Anyone know where I need to start please??

I am spending 2017 trying to deal with outstanding debts I was doing so well sorted out lots of minor debts into payment plans, clawing down the credit cards then this jumps into the mix and throws my anxiety through the roof ... We reap what we sow I guess

Hello there

Thanks for posting.

I'm sorry to hear that this debt has suddenly come about and made things more difficult for you. It's difficult to be absolutely sure what's happened with this and what you could or should have done without knowing a bit more about the situation and I wouldn't want to guess.

It sounds like something that we can definitely help with if you get in touch with us and speak with a debt advisor though if you'd be interested in that. Details of how to get started with us can be found here.

It's free to register with us and the advice is free too.

I hope this helps.

Allen

Struggling with debt? Ask a debt adviser a question

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