Sister in ALOT of debt - Advice needed !

ew2712

Hello Everyone,

This is my first post after reading the forums for a while now, and was prompted following a phone call from my sister today.

She called me (and you know she's in trouble when she asks for my advice !!) about her debt, which stands at £40,000. :eek: It is all unsecured credit, loans, credit cards etc. and all totally paid up to date. She is living way beyond her means and has just recently moved in with her boyfriend (she did live rent free with our parents). She has accepted that she can longer cope with the repayments and was considering bankruptcy or an IVA.

She's 33 and earns very little as a Flight Attendant, has no assets, no house, savings of about £2,000 and a car worth about £6,000. Nearly all of her monthly income goes on her repayments, and cannot be sustained in her relationship with regards to contributing to the living expenses and upkeep on the house.

Should she consider bankruptcy, or would an IVA be better for her? There is no way she can repay £40000 on her income easily without a long term plan in place to try and secure her financial future. Can anyone please help me with this one? I have told her that bankruptcy should be the last on her list.

Thank you in advance.

Liz

Broken_hearted

Hugs she needs to get proper advise from one of the free organisations. First she should do a SOA so she knows where everthing is going.

lynzpower

She'll need to place n SOA on here so that we can see.

There are a number of people who post here, who ARE managing to pay off that sort of debt without IVAs or bankruptcy, although we'd have to see what shes got coming in and out. Paying off debt EASILY, wel not sure anyones doing that, its certainly easier to get into than out off

All the very best to her and welll done you for posting on her behalf - and welcome!

fizzel81

we have just under 26,000.00 to pay and have approached payplan there is also cccs both of these are free and will work with your sister at what she can afford to repay without having to go down the bankruptcy way

ew2712

wow.. you are really quick here arent you? Thats great, just what I needed. I am going to ask her for an SOA.

I have come across CCCS before (I was a customer for a few years until last year). I understand how they work, but with little chance of big pay rises, won't this option just hang round her neck for the next 30 years or so? The debt just gets frozen doesnt it? And that will just stick on her credit record for that amount of time.

She knows that she will probably have to sacrifice her squeaky clean credit record to get herself out of this mire, but it seems like an awfully long time.

Broken_hearted

Unfortunatly thats life it takes longer to get out of the mess than it did to get in it. People here will support her every step and each debt gone is a celebration. It's slow and painful to start with but it will get better/easier.

moozie_2

I am sorry to see your sister is in a financial mess but she's lucky to have you to help her out. Some really good advice on here already, hope you/she takes it on.

At the end of the day, you both have to accept that it's not going to be an 'easy' ride. As others have said, getting into debt is certainly a lot easier than getting out of it. It all depends on how much she wants to improve her financial position and whether she's willing to sacrifice her lifestyle for a debt free future.

Very best of luck to you both and look forward to your updates

kathfisch

Welcome and good on you for helping your sister!

The main question is whether her income can sustain her cost of living (basic, not extravagant) and have something left to pay creditors. I think you only need to have about £5 or £10 available per month per creditor (IYSWIM?) to be considered for a dmp, but I could be wrong!! If this is the case then your sister needs to get together all the determination she can find and start living well within her means, spending an absolute minimum and cutting out the unnecessary stuff. Its not easy, absolutely not, but it can be done. If she can do a detailed SOA then we can judge better.

Kath

Justin_Credit

Hi ew2712

Can you get your sister to log in to the site herself or at least have a look when she comes to you, this may have an inspirational effect on her to clear her debts.

I think she should seek advice from either Payplan or CCCs as has already been suggested, they will advise her on the best course of action.

It wont be easy, and, as has been said on here many times before, in her situation there are only 3 ways to pay it off;
1 Increase income
2 Reduce expenditure
3 A combination of the other two

Good luck and well done to her for facing up to the problem, it's a good start.

Regards JC

ew2712

Thanks for the fantastic replies. Having been in a bit of debt myself (£17,000 - but not now !!) I told her to contact someone ASAP. She called me back a bit ago and was really upset, she has contacted Pay Plan and will be talking to someone on Saturday. I think she had her head in the sand a bit, and the reality is her outstanding balance is nearer to £48,000.

Now, seeing as she only earns just over £10k basic (plus flight pay which isnt alot) I dont even know HOW she was lent that amount of money in the 1st place ! But anyway, I have told her not to worry and that there is loads of help out there for her.

I guess she will do a detailed SOA with Pay Plan, and I will definately post it on here for you guys to take a closer look at. Should I just post it in this thread, or somewhere else?

She currently pays about £700 a month to her debtors (but I would imagine that is nearly all interest).

I will pass on the link to this thread to her. And I'll keep you all updated, thanks !

Liz x

Housenet

Hi, agree with everything said on here but I have a bit of useful info to watch out for. (A friend of mine!) went down the CCS route, worked well and is now in the process of sorting her life out generally. You agree a repayment plan etc but I won't say any more about the process because it's a personal thing and may be different for different situations but please note:

Some creditors conviently loose this payment plan from either you as the customer or CCCS as the authorised body working on your behalf. This then allows them to continue charging interest on your account whilst the paperwork is resent & resent to the same or various addresses. CCCS know exactly where to send corespondance to most, if not all of the main credit companies so there's no reason why they (the creditors) should delay unless it's to generate more money out of you. It's the same principle why companies keep you holding on 0870 phone numbers, to get more money out of you. CCCS are the experts and they know what to do, shame the credit companies aren't all as helpful.

Barclays Bank was a good one, they kept sending her a letter saying her account was overdue even though they knew she'd gone to the CCCS but then they kept charging her £££ for every letter, then charging her again because adding this charge to her account meant she generated more charges. They were sending letters out every 2 days at one point. Then she told CCCS and it stopped.