Sister in ALOT of debt - Advice needed !

sanfrancisco

With her low income and very high debts, unless her partner gets on board, or she changes career, I would tell her to go bankrupt. It is important that she understands what is going and learns her lesson though. I don't mean to sound patronising, but unless she gets that she needs to spend less (I am sure you know what I mean having got out of so much debt) she will do it all again.

ew2712

You are absolutely right. It's an amazing amount of money to spend and having nothing to show for it (apart from a wardrobe full of clothes that she never wears).

I think that there will be an underlying reason for this consistent overspending, and she needs to get to grips with that intially before anything can happen in the long term. I just hope she can grasp how important it is for her future.

I intially thought of bankruptcy when she told me the true amount she owed, but wont they make her close her bank account with Abbey? (she doesnt have any debt with them)

Also not sure how that would affet her work. Hopefully Pay Plan will give her some sound advice.

steve_cov

I understand that some debt intermediaries will encourage creditors to accept a settlement on very large debts, which is better for them than receiving nothing in the event of a bankruptcy being declared.

This is not based on any experience, just what I have read - but it is worth examining all options with the intermediaries.

dinkylou

Please dont take this as being judgemental as its not meant that way, but how on earth have the lenders allowed her to accrue £48,000 unsecured? Thats a huge amount, especially on a low income!!!

I am gobsmacked at this especially as I was declined for credit the other day by Mint saying they were 'responsible' lenders and thought I was too much in debt already (was trying to balance transfer)

I feel bad for your sister and am truly astounded at the stupidity of her creditors.

HenryWeston

i would tell her to declare bankruptcy, it looks like the most realistic option, unless she gets a much higher paying job. if she does go bankrupt her spending habits will have to change as no-one will handing out credit & she would have to live within her means.

fairylights_2

Is she paying PPI on all these debts? if she is, she ought to see about cancelling it because it'll do her no good in trying to pay things off. I'd suggest she downloads Martin's Budget planner and goes through it all before her appointment so that she can give them full financial details as soon as they ask.

A little bit of me can see her moving back home ... which would be a shame, but also a real help in getting debt free.

ew2712

Yes, my thoughts are exactly that. How on earth have they lent her that much money on such a low wage.

Well, after much advice and crying and pondering and talking. Her boyfriend took a deep breath and expressed his own concerns over his assets (house, savings etc) being affected by bankruptcy and IVAs. So she has decided to go with a DMP with PayPlan.

I feel this is the right thing to do in the end, she will have a much reduced monthly outgoing spend, and she will be paying her debts off, which I hope will give her a much needed lesson in controlling her spending urges, and she wont suffer the stress of having to go through a bankruptcy process ( and neither will her partner).

I think she has an appointment with them this weekend to go through her statements.

I'll keep you al up dated, and thank you so much for all your advice.

Regards

Liz

charlie007

my sister is in the same position and is also considering this. I think the credit people need to be aware that this amount of debt is not realistic and should stop lending.

jitsuguy

As fairylights has said you need to check whether your sister is paying Payment Protection Insurace (PPI) on her loans. If your sister is, then most of the money being paid to the creditors will be interest and payment protection and not paying off the actual loan!

The best way to find out is to call all the creditors and find out, if it is on CC/loan tell them to cancel it. They will bug you to leave it on but be strong minded and give them the order to remove it and they will.

Hope this helps,
Jitsuguy

funkyBase

You said she has savings. There is no point having savings if you are in that amount of debt as the interest she is earning on the savings is nothing compared to what she is paying. It would be a good thing to use it to pay off some of the debt, 2k down.

Also does she need a 6K car? What about public transport, always good places to start.

I agree with PPI. I would tell her to consider a craeer move, extra job etc.