Debt trouble

Sheena82_2

Hi all

My sister was crying on my shoulder on Sunday as she is really worried about her debt, I will tell you the little i know about it and if anyone can help i would be really greatful.

She has two children and has just given up work to look after the the youngest.

Also recently her ex partner who was paying her £50.00 per week has lost his job, and I know she is paying aroud £120.00 per week to debtors and is really struggling to manage and with christmas getting closer it is really stressing her out.

I was thinking about giving her money but decided this would not help in the long run so I was going to go to her house and call all of her debtors for her to see if I can reduce the payments she is making and freeze interest but I just want to know how likley the companies are to agree to this and if for example she is paying 1 company £40.00 per week what can I get it reduced to .

Any help would be greatly appreciated.

And if all else fails we will go to cab but want to try and sort it myself first.

bluejeans

I would suggest calling them. what is there to lose. x

Tixy

What you are suggesting is a form of self-managed DMP (debt management plan). If she can't afford her current repayments this may be a good idea - however its worth noting that if she starts to pay less than the agreed minimums she will be affecting her credit file.

First of all go through her finances with her to work out her income & expenditure and her current debts - use this link as it helps you include everything - http://www.makesenseofcards.com/soacalc.html
Then if she shows a shortfall (i.e. she can't meet the repayments) then you could either arrange for her to speak to a debt advice charity (CCCS, Citizens Advice or Payplan) or you could suggest a self managed DMP. You would need to write to each creditor and offer a reduced payment to each, include her Income & expenditure form to shop what she has left over. You should split the debt repayments pro-rata based on the outstanding balance, so that no creditors in unfairly favoured.

Eg if she can afford £110 per month and owes £2200 in total then she should pay £1 for every £20 debt.

Read up on this and other info on the national debtline website http://www.nationaldebtline.co.uk/england_wales/debt_advice.php#4

Hope you manage to help her. You could post her budget on here for ideas of how she can save money if you are stuck for ideas (with her permission of course!)

Good luck

Sheena82_2

Hi Tixy

Thanks for that great advice about the 1 pound for every tweny as didnt know how much to reduce it to.

Tixy

Hi Sheena

The amounts above were just an example - she needs to work out what is left for debt repayments after household & living costs & childrens costs but before any luxuries. Whatever figure this is per month should be divided up between her creditors. Creditors can't have money she doesn't have so they can only have the left over amount split between them all. Obviously there are more likely to accept her reduced offers the larger the amount the are receiving.

If you do decide to do a debt management plan then you should also ask creditos to freeze interest & charges on the account (some will, some won't) - template letters are available on national debtline again.