boyfriend's debt is spiralling out of control - help!

melt71

Just had a very upsetting conversation with my OH regarding his debt problems, he sounds like he is starting to get depressed.

Bit of background...
He has always had a reasonable disposable income until about 18 months ago he moved back home to look after his mum when his dad died. She was in serious financial difficulty and he ended up paying off all her bills (not just for the funeral but other debts as well).

He's now got £10k worth of debt but is currently in full time college and is therefore only able to work for about 20 hours a week. He's planning to change to a distance learning course so that he can work 30 hours.

His credit cards are out of control, he's asked for my help to get him new ones (with 0%) or preferably a loan, but he has already been refused for a loan and I think it may be because he hasn't been on time with all of his credit card payments. He's struggling to keep up with organising his money so I've offered to help him to get on top of it.

Can anybody help? I need to know about reasonable debt consoladation loans, suitable for someone with a not so great credit rating (but a reasonably good history over previous years). I've no idea if such a thing exists. He can afford to pay up to £250 a month and realises that it will be spread over 48 months plus.

Any ideas or pointers appreciated. Thanks in advance.

chevalier

The very first thing you and your boyfriend MUST do, is write down every income and expense he does each month. And it must be everything, ie if he regularly buys sandwiches at college that goes down etc.
Once you have a list of all expenditure, then it may become obvious where he can cut back. Then he MUST set a budget that he can live with and STICK TO IT. This is what he would have to do if he got a debt consolidation loan anyway, so he may as well do it himself. Also I gather that some debt consolidation loans can have high APR's that you would be paying for a long time. And I don't know how they affect your credit rating either.

Secondly, if he can afford to pay a debt consolidation loan £250, why isn't he using this money to pay off his debts?

As far as cards are concerned you can go one of two ways. Either try and get a 0% deal and then move the existing debts across. Or write to each credit card and explain that he is in financial difficulties and that he can pay x £'s each month to service his debt. Pay the most off the credit card with the hightest APR. Credit card companies would generally rather have lower payments for a longer time, than have to write the debt off completely. Once they have accepted the payments, set up direct debits for each amount so that he cannot 'forget' to pay.

Check that he is getting all the benefits he may be entitled too, eg a single person rebate on community charge?

Finally and this is the toughy, if his mum is now back on her feet financially, perhaps now would be the time to ask for some of the money back? Very hard I know. If she can't help then fair enough.

Before he swaps courses, he could speak to the Students Union Welfare Officer. They may be able to advise him on his best course of action. How long has he got left of his course. If is is less than a year, then he should probably stick it out. If he takes the steps outlined above then it may ease his debt burden enough for him to continue with it.

Finally if he is living on his own, make sure that he is on the best electric, gas, mobile phone etc tariff. You can literally save £100's a year by switching providers.

Sorry for the long post. But hope it helps

CLAPTON

its a great start that he has been able to confide his difficulties in you.

just to add a few things to the previous post by chevalier

it may seem harsh but do NOT be tempted to help by taking out CCs in your name and transferring debt from him to yourself....give lots of moral support and help but donot transfer debt

encourage him to post a full Statement of Affairs SoA here, I'm sure people will help with ways of reducing spending

If you browse the bulletin board you will see examples but the general format is

: statement of income:

: statement of expenditure
this should be quite detailed but excluding debt repayment
: a subtotal to save us all having to add it up

: statement of all debts including:
for Credit cards show: outstanding amount, monthly repayment , APR
for loans/HPs show outstanding amount, monthly payment, APR and number of months still to pay;
Say whether you are paying PPI on your debts

a subtotal of the total debt and of the total repayments, to save us having to add it up

also add a brief details of your situation

tipsychick

I would reiterate all the advice above but most particularly, do NOT transfer any of the debt to your name in any shape or form. You do not want to be paying off his mum's debt down the line.

I know you don't suggest for a moment you're tempted to do that but it can be difficult when you love someone, they're in trouble and you want to help out!

melt71

Transferring the debt into my name hadn't even occured to either him or me! Even if I was willing to do that he would never let me. I have money concerns of my own after taking out a huge mortgage to buy my home of my ex husband so someone else's debt is the last thing I want to be taking on!

The good thing is that he is now living rent free at home as his mum is now back on her feet and she is able to support herself (and him) a bit more - she lets him live there and eat for nothing, which he has been doing for the last couple of months. She isn't able to repay the debts though and I doubt he will ask her to. She is a pensioner on a low income. I think all of this has been caused by lack of communication, I don't think she realised how seriously in debt he was getting by bailing her out and he just takes it all on and pays everything on his credit cards.

The plan within the next few months is for him to move in with me, which obviously won't be rent free but he will be working full time by then as his education will be a distance learning course rather than a full time college course. So he will have much more income as well as more expenses (contribution to my bills & food).

Thanks for your replies so far. I think a loan sounds like the best option, but I still don't know where to look as most of them seem to be secured and he doesn't own a house. Any ideas?

CLAPTON

really, without knowing any details of the size of each loan or its APR or his likely expenses or his likely income or whether he has a good credit reference file, its not possible to say.
you mentioned a figure of £10,000 ...now while that's quite a lot, but if it's on standard CCs then that should cost about £200-300 a month to service at the minimum repayments. While this is a lot of money each month, it is not a crisis for an ordinary person (no children, no rent ) with an income.

however, if you are predetermined to get a loan then:
I would get a copy of his credit status from the agencies
then i would look at martinsmoney tips under best loans
then i would enquire of just one to see what they can offer
but it maybe he would get a much better deal once he has a full time job




best wishes whatever you decide

lynzpower

Claptons right, without an SOA we really couldnt say much more. If you get that from him, then this will defiantely help xx

Giddytimes

Is your partner at university? If so I echo the point about making an appointment with the student welfare officer. Universities receive extra funding to help students with financial difficulties, each university has a different proceedure but I applied for the fund this year and received £1800 which has certainly helped take the pressure off whilst I concentrate on my finals.
It's not easy to receive the extra funding, he would have to provide bank statements & credit card statements with explanations of all debits to prove he hasn't been wasting money and write a paragraph or two about the reasons behind the debts etc and also a detailed SOA. It would be well worth it though if it allows him to finish his course without working himself into the ground.

KatrinaC_2

Something that hasn't been suggested so far is calling the credit card companies and threatening to transfer to another card as his current interest rates are too high - the card companies don't know whether he will be able to get another card and when I did it they offered to lower my standard interest rates AND gave me preferentially low interest rates on life of balance transfers.

Before he does that though, it would make sense to sit down and wok out what he can actually afford to pay and whether there is any way he can shuffle the debts about to maximise the potential savings he would get from the companies

Kat

rchddap1

The reason many people emphasised that you should not take on his debt is that you mentioned that he asked for your help in getting credit cards or a loan. If your name is involved in the application then essentially you would be taking on the debt. Even if his name is also on the application, if he didn't pay they could come after you for the whole amount.

melt71

Ok sorry, I didn't realise you needed to know each individual debt;

Amazon £6000
Halifax Platinum 1 £1900
American Express £2300

He hasn't got a clue what the rates are he only knows that they are high! I'm going to sort that out this weekend when I have a look at his statements and then prioritize them. I thought about ringing the cc companies and threatening to change, as far as they are concerned he's a great customer as they make loads of money out of him!

His current income is only £560 take home a month, as I said, this will rise within the next couple of months once he changes to a distance learning course. He reckons he can live on £160, I'm not so sure so I will sit down this weekend with him and do him a proper budget. He doesn't drive and walks to work and college.

He asked about student loans and grants and was told that he wasn't entitled to anything except help with his travel (he walks to college so I'm not sure how they thought this would help him!). He is not doing a degree level course and this is the reason for the lack of financial help available to him. For his distance learning course he intends to get a career development loan for 80% of the fees.

Thanks for all your replies, I hope the above info is what you need to give further advice.