My friend is in debt

moneysaver12

Hi my friend is in debt of about 80k, ( loan and credit cards) plus he has a mortage which there is 30k left plus interest. He took out a secured loan on the house which was 50k, this is included in the 80k he owes. He tried to sell his house but just found out that because he owes more than his house is worth, he can't sell it.

Today he rung cccs to try and get some advice. They have advised him to get the house repossesed and to contact the loan company and tell them that he can't afford the payments, he has not been paying for a few months now.

They say after he has done that to ring another number to sort out the rest of the debts which are credit card debts of about 30k.

Now my friend is going to move in to rented accomadation and let them reposess the house. How does he go about making an payment arrangement with all the companies he owes money too with the fact he can't pay the orginal monthly payments and hasn't been paying anything for a few months.

Can anyone help please

moneysaver12

Bump.,.......

Tixy

Hi Moneysaver. Your friend needs to do a budget. Suggest the statement of affairs from http://www.makesenseofcards.com/soacalc.html. He needs this because he needs to understand his situation and what he can afford to pay and because it is likely his creditors will ask very similar information. If you can also get him to post it here (or post it yourself with his permission) he will also get the benefit on many people's knowledge and experience on what he can afford and where he can cut back.

Regarding arrangements with unsecured creditors - short term he can send a letter offering token payments (say £5 per month each of even £1 per month)- template on nationaldebtline website. He could say on this that he is organising a debt management plan - and will be in touch with a revise payment plan within a month.

He can set up a debt management plan with help one of the free organisations (CCCS, Payplan, nationaldebtline, citizens advice, christians against poverty) or he can do it himself. Basically he needs to set a budget for his priority costs (including food, rent, utilities etc) and whatever surplus he has should be split between unsecured creditors pro-rata to the outstanding amount. Again if he is doing it himself best to get advice from here as to what is an 'allowed' for each area of his personal budget.

Hope this helps.

moneysaver12

Tixy wrote: »

Hi Moneysaver. Your friend needs to do a budget. Suggest the statement of affairs from http://www.makesenseofcards.com/soacalc.html. He needs this because he needs to understand his situation and what he can afford to pay and because it is likely his creditors will ask very similar information. If you can also get him to post it here (or post it yourself with his permission) he will also get the benefit on many people's knowledge and experience on what he can afford and where he can cut back.

Regarding arrangements with unsecured creditors - short term he can send a letter offering token payments (say £5 per month each of even £1 per month)- template on nationaldebtline website. He could say on this that he is organising a debt management plan - and will be in touch with a revise payment plan within a month.

He can set up a debt management plan with help one of the free organisations (CCCS, Payplan, nationaldebtline, citizens advice, christians against poverty) or he can do it himself. Basically he needs to set a budget for his priority costs (including food, rent, utilities etc) and whatever surplus he has should be split between unsecured creditors pro-rata to the outstanding amount. Again if he is doing it himself best to get advice from here as to what is an 'allowed' for each area of his personal budget.

Hope this helps.

Thankyou very much for your help. I will show him this and get him to do a statement of affairs