Debt advice for daughter please.

Saint_Chris

A bit long but here goes.

My daughter is 25 has a full time job, with a decent wage, she has lived at home until 12 months ago when she moved in with boyfriend.

We always taught daughter to live within her means, ie if you can't afford it you don't get it, and she has been real good with money, she has 1 bank account which her wages went in, and she has an on line saver, where she has about £3 000 in, she saved this, should her car break down etc.

She moved in with boyfriend 12 months ago and they are private renting paying £425 a month.

They have now decided that they want a mortgage, and to buy a house, boyfriend works but doesn't earn as much as my daughter.

The other night a mortgage adviser came out and said that they would be able to get a mortgage for £100 000, but they would have to put a £10 000 deposit down. (not concerned with this at the moment)

6 months ago daughter got a credit card, we advised her to do this, to get some credit rating, so she has been using this and paying the balance off in full at the end of each month.

Problem is boyfriend, he did tell daughter that he owed some money on a credit card and he hasn't paid it of.
Mortgage advisor said that this could cause problems.
So they went on the internet and got his credit statement.

I've just read it, and it seems that he owes over £7000 in debt, and not just to one credit card.

he owes a few store cards, and he hasn't paid these off and the interest has been adding up

from what i can remember there is

2 store cards
1 credit card
1 mobile phone contract

I can't really remember them all as i only glanced at it.

Daughter told me that he has been to one of these debt consolodating agencies, just for a chat.

I've told her to hang fire, for a week and let me see what she can do.

Boyfriend is really embarrassed etc, i'm not to bothered about the debt, i was more dissapointed that he had made no effort to pay it back.

But we all have our faults, and he is a lovely lad, treats daughter great, and is a fantastic dad 5 days a week to his son who he sees a lot.

Hubby is out for the day so i've not had chance to talk to him about this,

what i would like is a bit of advice as the best way to go.

Any advice would be appreciated

thanks

stapeley

I would advise against having a joint mortgage . He may very well be a NICE LAD , but he has already shown he is no good with money . The fear is he will drag daughter down with him , if things go pearshaped .This certainly not the time to get getting into more debt . The best thing would be to rent , there are loads of property about . Rent first and let him sort his debt out .

Horace

Avoid the debt consolidating agencies too - speak instead to one of the debt charities such as CCCS or National Debtline, use one of the agencies where you pay them just means that more debt gets racked up and it becomes almost impossible to pay it off.

Your daughter should avoid having a joint account or mortgage with him and it goes without saying that she shouldn't get an extra credit card for him.

Saint_Chris

daughter wouldn't get a card out for him no matter what.

I don't for one min think that he will drag daughter down, she is to strong for that, i know her. She deals with all the bills now, and has control of most of the money.

I know about the joint mortgage, but how do i tell her,

CLAPTON

-debt consolidation means getting a loan for 7000 to transfer the CC/store cards debt to
-it doesn't of course reduce the debt and it doesn't pay any of it back
- lots of people's experience is that once its all consolidated in just one place (like in the adverts) people see the problem as solved and then run up new CC / store card debts so in a year or so they have a loan for 7k plus a load of CC debts too.


-I'm assuming he hasn't actually missed any payments of defaulted on any of the cards.. he he has then the advice would be different

In any event suggest he gets copies of his credit files... that will show all his debts and whether payment have been missed.

Then he needs to
-draw up a proper budget .. try
http://www.makesenseofcards.com/soacalc.html
-he needs to look at his income and outgoings and draw up a timetable to repay the debts
- look to see if he can increase income (parttime job etc)
- look at his spending and see what can be reduced.. here a spending diary can be very helpful (basicaly writes down everything he spends to see exactly where the money is going).
-obviously very important he take responsibility for this and not you or your daughter.. just be in close support.

I would have thought that this is not the right time to think about getting a mortgage .. sort the debts out first and then see how things are.

In any event your daughter should not get any joint accounts etc with him until she has seen his credit files and of course not to accept any of his debt.

RAS

Hi

If he has debts that have defaults, it will seriously affect his ability to get a mortgage in the current climate. if he has late payments, it will also affect him.

If your daughter gets any joint accounts with him, it will affect her credit rating by association.

He needs to talk to one of the debt charities http://www.moneysavingexpert.com/loans/debt-help-plan#help

He may or may not need their full services but they can tell him where he stands.

He must avoid any debt consolidation companies. They just take a huge fee that for doing what he can get for free from the debt charities. And this will do NOTHING for his credit rating.

The record of these debts will fall off his record after 6 years, so it depends how long ago he stopped paying.

He should be able to reclaim charges on any of these accounts, except the phone. Given the number of deeply dodgy phone accounts (particularly 3) which have been defaulted recently, that may be worth challenging. There is stuff on the BBC web-site if you search for Lowell.

It looks like they will be best off keeping his accounts separate but doing a joint SOA and work to clear his debt before the defaults dropp off his record, so they can then look at a mortgage.

Starlett

Show her this site!!

I made that mistake with an ex... I am 29, strong, have a great job and in control of things in my life... but for some reason when you fall for a guy you find only the good in them, and mistakes of debt can be sorted 'together'...

A joint mortgage, in this current economic climate... may be a dreadful mistake!! (I hope to goodness that it's not!)

I hope it works out for your daughter!

Starlett x

Saint_Chris

-I'm assuming he hasn't actually missed any payments of defaulted on any of the cards.. he he has then the advice would be different

Yes he has missed payments, one of them said he owed £893 (guessing)
balance now £1 200 (guess)

In any event suggest he gets copies of his credit files... that will show all his debts and whether payment have been missed.

They got one the other night of the internet, i saw it today, it was about 15 pages long, listing all of his previous addresses, bank details, credit cards, etc

If your daughter gets any joint accounts with him, it will affect her credit rating by association

I think (not sure) they opened a joint bank account, to pay bills out of, i know that daughter still has her bank account, as she still have the couple of grands worth of savings that she had when she left home.

He must avoid any debt consolidation companies. They just take a huge fee that for doing what he can get for free from the debt charities. And this will do NOTHING for his credit rating.

I sort of guessed this, i'd read something somewhere before, that's why today i told her to hang fire

The record of these debts will fall off his record after 6 years, so it depends how long ago he stopped paying

Some of them are only 3 years old, i did only glance at the report, i really need to read it.

I hope it works out for your daughter!

thanks xxx


What i would like them to do, is give the house that they are renting up now, and move in with us.

We have a 3 bedroomed house, they used to stay here a lot before they moved out, they could have the front bedroom back, and the little one could stay in the spare room when he comes.

They could do this for 4 months, which would give them time to save.

Rent is £425 a month
poll tax is £90 a month

that's £515 a month, plus we wouldn't charge them anything for living here.

So i'm guessing that in 4 months they could save quite a bit, and get some things paid of.

RAS

Saint_Chris wrote: »

Yes he has missed payments, one of them said he owed £893 (guessing)
balance now £1 200 (guess)

If this has 8888 against it, or a default, then a mortgage is not going to happen in this economic climate. The good deals require an LTV of at less than 85% and an absolutely clear credit record.

They got one the other night of the internet, i saw it today, it was about 15 pages long, listing all of his previous addresses, bank details, credit cards, etc

There are three companies, he needs them all


I think (not sure) they opened a joint bank account, to pay bills out of, i know that daughter still has her bank account, as she still have the couple of grands worth of savings that she had when she left home.

If they have a joint account, close it and dissassociate her. They need to protect her credit rating as well.

Some of them are only 3 years old, i did only glance at the report, i really need to read it.

if he has not paid in the last three years, it is likely he will have defaults. If the defaults are 3 years old, they will fall off in three years.

Hi it does not matter how fast he pays this off, it is on his record for the six years, and NOTHINg will make that happen faster.

Jacks_xxx

Hiya Saint Chris,

Bless you for being such an understanding future mother in law about all this!

My advice would be to pay off all the debts before even looking at getting a mortgage, but definitely don't go near the debt company route and be aware that any late payments will sit on your daughter's OH's credit record for the next six years no matter what they do. (No commercial company can clean up his credit rating either - in case he gets tempted. )

It's pretty hard to get a mortgage at the moment even with a perfect credit score so now is the time to pay off the debts and save up a nice big deposit.

And not to completely pee on your daughter's firework but I would suggest that a 4 year plan might be more appropriate in the current climate than a 4 month one.

Get them to punch all the debt details into the Snowball and see how long it will take them to get it all paid off.

http://www.whatsthecost.com/snowball.aspx

I'm sorry not to be more helpful hon, but the mortgage market is a toughie at the moment.

Love Jacks xxx

Saint_Chris

I'm sorry not to be more helpful hon, but the mortgage market is a toughie at the moment.

I would like to thank you all for the help, that you have given me,

yes hubby and i are going to sit down with them this week and spell it all out.