Debt Advice: Income Support & Disability Allowance

MPlant

I am looking for advise for a friend of mine who has a number of debts which he is struggling with due to unforeseen circumstances.

Up until last month he worked as a telephone operator from his home; he has now been made redundant due to the current economic climate.

He is registered blind (having severely impaired vision and being colour blind) and therefore seeking employment is especially difficult for him.

Having being made redundant he has opted to go on income support and receive housing benefit. Returning to education is something he is considering. He currently lives in council rented accommodation however this really does not meet his needs; it is in an unfavourable area and needs a lot of work doing to it. His preferred option would be to move into private accommodation with better facilities that could be paid for through his housing benefit.

His current debt is £7,538.40 and his monthly income is £1,305.46.

MONTHLY SOA

INCOME
Income Support - £585.56
Housing Benefit - £434.98 (this is the maximum amount he can receive)
Disability Allowance - £284.92
TOTAL: £1,305.46

EXPENDITURE
£450 - Anticipated Rent (having moved into private accommodation with improved facilities that meet his needs)
£0 - Council Tax (paid by local authority)
£65 - Electric / Gas (currently only electric at approx £15 per week)
£0 - Water (currently deducted from income support)
£6 - TV License (direct debit at discounted blind rate)
£35 - Broadband, TV & Phone
£35 - Mobile Phone Contract
£0.00 - Smoking - (was £85 but he is trying to give up)
£175 - Food (£40 p/w - does tend to buy easy options as cooking not easy for him with his eyesight)
£195 - Other Costs (Social, clothing, domestic products, hair, etc)
£0 - Travel (doesn't travel around much but if does is free)
TOTAL: £1011

SPARE EACH MONTH = £295

CURRENT DEBTS
£500.00 - Capital One Credit Card - (currently pays minimum each month)
£1,117.46 - MBNA / Virgin Money - (not paid for approx 5 months)
£122.04 - 3 Mobile (old phone contract) - (not paid for approx 2 months)
£125.06 - O2 (old phone contract) - (with recovery agency, ignored letters)
£1,735.81 - Barclay Card - (with recovery agency, ignored letters)
£639.20 - O2 (old iPhone contract) - (with recovery agency, ignored letters)
£239.94 - Sky (old contract) - (with recovery agency, ignored letters)
£541.56 - O2 (old mobile contract) - (with recovery agency, ignored letters)
£393.86* - Index Extra - (now with recovery agency who offered settlement of £196.93 on 25/06, ignored).
£752.45* - Empire Catalogue - (now with recovery agency who offered settlement of £376.23 on 17/08, ignored).
£849.00* - Littlewoods - (with recovery agency who are threatening action, ignored letters)
£522.02* - Lloyds Overdraft - very old debt from previous address
* these debts are all with the same agency.

£7538.40 = TOTAL DEBT

He tries to live a very independent life and though he could have a Personal Assistant to help with shopping, cooking, travel, etc or a Guide Dog he prefers to live his day to day life without such options.

His income and outgoings are not a struggle; a way forward in managing his debt is the area of difficulty.

Can he consolidate his debt?
Would this be too costly and difficult with him having nothing to secure it against?

Can he agree a monthly amount with each debt or is this too late? Would this cost too much?

I'd be grateful if anyone could give advise on the options he has in his particular situation.

Many thanks in advance.

MPlant

Can anyone help?

misspoppy

HI

He should be entitled to have all the adaptations to his council home if he went into private renting the landlords probably wouldn't agree to the adaptations. It would be worth posting on the house buying/renting board asking landlords if they would allow the adaptions he'd like to have.

He should have someone come out to his home and look at what needs doing and getting the council to sort them its far better to be in a secure low rent home than at the mercy of a private landlord.

MPlant

Thank you for your reply.

He is actually considering sticking with Local Authority housing, however even if he does move into Private accomodation he doesn't really need any adaptions. It would more likely be extra 'convenience' facilities like a dishwasher.

With the accomodation issue aside, I'm actually really looking for advise around what do do with regard to his debts.

Can anyone help with advise around these debts?

Many thanks again.

MiniLaura

few things - could his DLA be increased? Im sure blnd people qualify for higher rate in some cases - sounds like he is on middle? It may help him pay debts or pay for expense of having to pay more for food etc?

Im in a private landlord and have had some adaptions made to house - namely another smoke detector fitted to ceiling, and may be getting a hearing dog in future - landlord agreed to this although contract is no pets.

could a local/social housing authority be a better option for him? Some charities do run schemes and there may be better quality housing, open to adaptions without going private?

I'd advise maybe the £1 per debt if he isnt bothered about credit rating in future etc, and then work out what he can pay to each or perhaps giving token payments to some now and focusing on the repayment of others to reduce the number of debts he has? (with spare of £295, supposing £250 left over after token payments - start paying off the smallest debts etc, and then you end up after a few months being able to pay larger amounts to the larger debts?)

£500.00 - Capital One Credit Card - (currently pays minimum each month) - pay off when token amounts are in place for other debts
£1,117.46 - MBNA / Virgin Money - (not paid for approx 5 months) - arrange a payment plan
£122.04 - 3 Mobile (old phone contract) - (not paid for approx 2 months) - pay this off first
£125.06 - O2 (old phone contract) - (with recovery agency, ignored letters)
£1,735.81 - Barclay Card - (with recovery agency, ignored letters)
£639.20 - O2 (old iPhone contract) - (with recovery agency, ignored letters)
£239.94 - Sky (old contract) - (with recovery agency, ignored letters)
£541.56 - O2 (old mobile contract) - (with recovery agency, ignored letters)
£393.86* - Index Extra - (now with recovery agency who offered settlement of £196.93 on 25/06, ignored).
£752.45* - Empire Catalogue - (now with recovery agency who offered settlement of £376.23 on 17/08, ignored).
£849.00* - Littlewoods - (with recovery agency who are threatening action, ignored letters)
£522.02* - Lloyds Overdraft - very old debt from previous address
* these debts are all with the same agency.

Recovery debts are ones that could go onto token payments? then focus on clearing other ones, not sure if recovery agency would let you pay off debts seperately or insist on lumping it all together - in that case - continue the token payments if allowed and get savings put aside when other debts clear to offset debt - they sometiems give you a settlement figure?

Hope some of this helps but check it can be done, ive been helping my partner sort out several debts when a consolidation loan wasnt possible and breaking them up helps!

MiniLaura

just read the reply re having adaptions like a dishwasher - my opionion is that a dishwasher may add value to the property if its rental - a private landlord may agree to it, and then if he moved in the future it would stay as part of fixture and fittings?

I dont liek gas cookers so changed to an electric cooker in current place - paid for cooker and when i leave i will probably leave it there, its an improvement on the odl gas cooker and everyone benefits?

sleepless_saver

On the debt side, the standard advice is to contact one of the free debt help organisations such as CCCS or National Debtline, see Martin's article which also has contact details. They can advise on the best solution and help with negotiating.

He should also do a statement of affairs (soa). This will be useful for the debt help people, plus if he (or you on his behalf) post it on here people will come up with moneysaving ideas. Link to soa tool - http://www.makesenseofcards.com/soacalc.html

ETA: sorry, I didn't spot that there is a brief soa in original post. If he does have nearly £300 spare a month as the soa suggests, then that should make inroads to the debt quite quickly, and the consolidated loan option looks even less appealing. If he doesn't have that sum available for repaying debt, then he should work out where it is going by doing a more detailed soa (it's easy to forget things) and keeping a spending diary.

Horace

On the job aspect his DEA at the jobcentre will be able to help him and maybe point him in the direction of The Shaw Trust who help disabled people into work.

He could try getting his DLA increased and maybe he should speak to someone like DIAL about this as they can help him complete the forms.