Parents on a (fee paying!) dmp and brother going to uni

Dinah93

Hi all, just wanted to tap the fountain of knowledge in here. My parents are on a debt management plan, with just over 2 years left to go. They both earn in the region of £30-£35k each a year, however are on a debt management plan to clear debts of around £90k (from what I can work out, dad doesn't think I know abotu the dmp, mum told me but seems confused on the figures). I know the dmp takes over half their income each month, but again not so sure on figures. My brother is at private school at the moment, which my gradad has paid for the last two years after taking out a mortgage on his house so my brother can finish his A-levels there. However that money has now run out.

In September my brother goes to uni, and will be on the full fees/minimum loan combination because of my parents salary. This will roughly cover his fees and some of his accomodation, but mum is worrying herself into a frenzy over how they will pay his living costs and rest of the accomodation. Does anyone know of anything they can do to increase his loan or anything? He will be getting a summer job, my parents both work very long days so can't take on regular extra work, although my dad does a bit of decorating sometimes for friends (when mums car went, he is decorating the car dealers house in lieu of payment as they couldn't afford a replacement)

Also, the fee-paying aspect, now they're on it, is it worth them going to a no-fee company or is it not possible/advisable to rock the boat at this stage? Their current payments seem extremely high, if they didn't have me, my other half and a friend of my brothers living there each paying £240 a month they wouldn't be able to pay the mortgage, all bills and petrol to work and actually have anything left for food. My brothers friend moves out in june when he finishes his a-levels and is going back to his family in Dubai, and I know the £240 a month drop is worrying mum too.

Sorry for the long ramble with a bit of an absence of facts, I'm just hoping I can find a glimmer of hope for her.

Dinah x

10past6

Hi Dinah

Dinah93 wrote: »

is it worth them going to a no-fee company or is it not possible/advisable to rock the boat at this stage?

Take a look at my signature

RAS

Yikes

What fees are they paying for this service. Some companies take 15% which is a lot of money.

Are you absolutely sure this is a Debt Managment Plan, rather than an IVA?
if it is a debt management plan, then I would strongly advise they move to a debt charity ASAp.

A DMP should pay the mortgage, the CT, utilities and food and clothing, then reassign the remaining money to the creditors. So something sounds very wrong here.

Dinah93

I think this is their problem, they seem to be paying insane ammounts of money out, it doesn't cover everything, but mum is insistant they can't change to a fee-free company once they started the plan. She says it's a dmp not an IVA. Thanks for that document, I might have to have a sit down chat with her. Unfortunately it's not an area I know much about as my debts were transfered to 0% and I paid them off fairly quickly.

RAS

Look something does not add up. Not sure what the mortgage is but if you folks are on £60-70k and had debts of £90K, then they should be able to pay it off and live.

Mum may not tell you everything but try to get her to do an SOA and to come on here herself. Even if she does not post she can learn a lot.

And i am sorry to add that I suspect that they are not covering the costs of having four young adults in the house if they are only charging £240 per month each.

You really cannot help mum much more with the worry about DB until you know more but you could start helping by paying more rent.

Dinah93

We offered more rent before we moved in, she wouldn't take it, says £480 for a 10ft square room is more than enough even for two of us in there. I think she looked at local rents and realised we could rent a two bed house across the street from my work for £450 a month, and save about £200 a month on petrol, and obviously have a lot more space and privacy, would be slightly more taking into account bills, food etc, but still. She owes me and OH over £2200 at the moment, of which she currently pays about a quarter of our rent back onto the CC it is on (CC in my name I balanced transfered for her before knowing of her debts). If we were to move out that'd never get paid off so I'd end up having to pay it, as without our rent she wouldn't be able to make the minimum payments. I'll speak to her tonight, it's really difficult, she asks for my advice, then won't tell me actual figures, so I was sort of hoping there was something I can steer my brother towards since he's a lot more likely to listen!

I know they have 4 mortgages from old houses (I didn't know it worked like this, I thought when you sold an old house the money you sold it for paid a mortgage off, afraid I really don't understand this concept), the current house mortgage is for around £220,000 and is fixed rate as they kept remortgaging to pay the school fees. Mum only got a full time job about 3 years ago, so they were paying out more than they earned for several years.

Thanks for replying, I'm sorry I've been vague on the details, she came to me at the weekend and asked for me to find out something she can do, but it's hard when I don't really understand her situation.

RAS

Dinah93 wrote: »

We offered more rent before we moved in, she wouldn't take it, says £480 for a 10ft square room is more than enough even for two of us in there. I think she looked at local rents and realised we could rent a two bed house across the street from my work for £450 a month, and save about £200 a month on petrol, and obviously have a lot more space and privacy, would be slightly more taking into account bills, food etc, but still.

I realise you are not getting the same service but you would be paying council tax, £100, plus utilities possibly £80 plus all the cleaning materials and the cost of furniture furnishings and things like light bulbs and all the kit that a house comes with.

Do a when we move out SOA on here and look at it.

Dinah93 wrote: »

She owes me and OH over £2200 at the moment, of which she currently pays about a quarter of our rent back onto the CC it is on (CC in my name I balanced transfered for her before knowing of her debts). If we were to move out that'd never get paid off so I'd end up having to pay it, as without our rent she wouldn't be able to make the minimum payments.

The absolute basic condition of any debt management plan or IVA is that you are NOT allowed to take out any further credit. What this means is that she has taken out more debts since the plan started 4 years ago. Does dad know she has done this?

Dinah93 wrote: »

I'll speak to her tonight, it's really difficult, she asks for my advice, then won't tell me actual figures, so I was sort of hoping there was something I can steer my brother towards since he's a lot more likely to listen!

I think you are going to find it hard because your parents (or maybe just mum?) think it is their responsibility to pay for everything when they simply cannot afford.

Your brother needs to get a holiday job and to get hold of the university and see if they have a job centre for part-time work there. I would actually think it might be an idea to have a chat with the student finance people once he gets his As finished and consider whether to defer a year, if he can get work.

I also think he would be wise to take a very good look at accomodation costs and see whether he can get a cheaper deal than living in halls, or at least spend time talking to existing students and see what the best options are.

Dinah93 wrote: »

I know they have 4 mortgages from old houses (I didn't know it worked like this, I thought when you sold an old house the money you sold it for paid a mortgage off, afraid I really don't understand this concept), the current house mortgage is for around £220,000 and is fixed rate as they kept remortgaging to pay the school fees.

Sounds like they have a load of endowment mortgages, which were very popular because the providers made a mint. They were supposed to pay off the capital sum at the end of the mortgage and provide an extra lump sum. Most have under-performed and hopefully your parents have made a mis-selling claim and had some compensation for this.

Dinah93 wrote: »

Mum only got a full time job about 3 years ago, so they were paying out more than they earned for several years.

I get the feeling they are some way off having their light bulb moment. How many years before they retire?

Dinah93 wrote: »

Thanks for replying, I'm sorry I've been vague on the details, she came to me at the weekend and asked for me to find out something she can do, but it's hard when I don't really understand her situation.

It seems to me that people are avoiding talking about the elephant in the corner. I assume your brother is completely in the dark about all this. It is actually quite unfair on him, because he cannot adjust his expectations in line with reality, either now or in terms of what sort of life he can expect to live on his own salary in the future.

If mum absolutely insists that she cannot change provider, I think you have two options. Tell her upfront that in that case you have to assume that she has an IVA because there is no legal impediment to changing DMP provider. Or get sneaky and check the Insolvency Register to see if they are actually on an IVA?

cheesedoffwithdebt

RAS wrote: »

I realise you are not getting the same service but you would be paying council tax, £100, plus utilities possibly £80 plus all the cleaning materials and the cost of furniture furnishings and things like light bulbs and all the kit that a house comes with.

Do a when we move out SOA on here and look at it.



The absolute basic condition of any debt management plan or IVA is that you are NOT allowed to take out any further credit. What this means is that she has taken out more debts since the plan started 4 years ago. Does dad know she has done this?



I think you are going to find it hard because your parents (or maybe just mum?) think it is their responsibility to pay for everything when they simply cannot afford.

Your brother needs to get a holiday job and to get hold of the university and see if they have a job centre for part-time work there. I would actually think it might be an idea to have a chat with the student finance people once he gets his As finished and consider whether to defer a year, if he can get work.

I also think he would be wise to take a very good look at accomodation costs and see whether he can get a cheaper deal than living in halls, or at least spend time talking to existing students and see what the best options are.



Sounds like they have a load of endowment mortgages, which were very popular because the providers made a mint. They were supposed to pay off the capital sum at the end of the mortgage and provide an extra lump sum. Most have under-performed and hopefully your parents have made a mis-selling claim and had some compensation for this.



I get the feeling they are some way off having their light bulb moment. How many years before they retire?




It seems to me that people are avoiding talking about the elephant in the corner. I assume your brother is completely in the dark about all this. It is actually quite unfair on him, because he cannot adjust his expectations in line with reality, either now or in terms of what sort of life he can expect to live on his own salary in the future.

If mum absolutely insists that she cannot change provider, I think you have two options. Tell her upfront that in that case you have to assume that she has an IVA because there is no legal impediment to changing DMP provider. Or get sneaky and check the Insolvency Register to see if they are actually on an IVA?

HI-I know of at least one company who charge for a DMP- and they are very sneaky-if anyone wants to know who they are please PM me. They encourage clients to go on very low payments, and save as much as possible with a view after about 5 yrs to making a f&!!!!!! offer to creditors. They also take a cut of the settlement deal- in my view this is an appalling manipulation of the system, and doesn't help the client at all. So I would not be surprised if the client were in a DMP sadly.

bozbear

Hi

Cant really help with the DMP questions, butwith regard to the student finance surely he should get the Tuition Fee Loan and still be able to get the full loan (but not the grant) the tuition fee loan will cover all fees, and the loan is £3300 (not loads but some)?

RAS

bozbear wrote: »

he should get the Tuition Fee Loan and still be able to get the full loan (but not the grant) the tuition fee loan will cover all fees, and the loan is £3300 (not loads but some)?

Not quite. If his parent earn say £65K between them then he only get £1866 for the maintenance loan. Therein lies the rub.

Dinah93

Thanks so much for your help RAS. Asked her a couple of questions and it transpires it is an IVA. Apparently they told them because of the size of the debt it had to be done over 7 years rather than the usual 6. I completely agree on the LBM, they still don't budget really, I've tried but it seems a bit patronising telling your parents who are 27 years older than you how to manage their money! I'm kind of the complete oposite as a result of DFW, I have charts and graphs for absolutely everything!

I lived with my ex for 2 years, so I am aware we'd be paying more than the £480 +£200 commuting petrol a month if we were elsewhere, at least £200 a month more in fact, but some days when I trip over the table trying to open the wardrobe, the space that that £200 would get me seems so tempting! But I'd rather be paying the money to mum and dad than a stranger, and it gets us £200 a month closer to buying a house of our own.

The £2200 is a credit card I took out while I was at uni (came with a free popcorn maker, do you get more tempting than that to a student?!) but never spent on, and didn't know you were supposed to cancel. She used it without me knowing to pay some of my brothers fees. I found out about 2 years ago, took the card back, and balance transfered it to 0% for her thinking this would help her to clear it quicker. The idea was she paid me a little a month, but it's only since my OH moved in wiht them that she's been able to pay me anything towards clearing this balance. The fact that she used the card without my knowledge is something I'm not happy about, but understand that she has just been trying to provide everything she can for myself when I was younger and my brother, and it was just very, very poor judgement on her part. She (almost) always made minimum payments on it, so it didn't damage my credit rating too much. My grandad has had to take out a CC for her too. Dad is now aware, he wasn't for a long time. A little of that CC balance is money he owes my OH, as he couldn't afford to mend the car so my OH paid for it.

Brother is largely unaware, certainly doesn't know the lengths they have gone to to pay his fees. Mum says it is unfair to expect him to pay towards his own costs at uni when they paid all my rent and fees. I worked part time and had my loan for day to day living. Also my rent was £55 per week, his is £98 for the cheapest one at the uni he has applied to! Fair and ideal it might not be, but I can't make her see that there isn't really another option as they just don't have the money, and it's not really fair on my grandad, a pensioner of 78, to ask him to take on any more credit.

Brother had a part time job last summer, he has about £1200 in savings, which he was telling me was at 10% but was locked in each year until August and he could only withdraw then. Thinking I had missed a trick I asked mum where his account was, but apparently it's just with them, so they are the ones paying the interest to encourage him to save. He's 18, 19 in September, but seems so young sometimes, he's been quite sheltered. I don't know whether to talk to him so he might take on a bit more responsibility and work more hours after his A-levels are in, or if that would just stress him out before his exams. He's a good lad, and I think he'd work if he knew he had to, but he doesn't realise he has to and spends most of what he makes (just bought a £800 bike which he still owes me £167 for 3 months later - maybe he needs the talk before he becomes completely financially oblivious).

Thanks for reading, I guess talking this through has lead me to see I don't really know how to help them, I just want to, and was hoping I could find a magic student loans loophole or something to stop mum worrying.