Parent's debts

brian.wainwright_2

Hi,

Two and a half years ago, my step father suddenly passed away after being involved in a road traffic accident. After a prolonged probate period, the inheritence process has finally finished, and his entire estate was left to my mother.

As they were never married, she incurred a huge inheritence tax bill. Along with paying off his creditors and the solicitors fees, she was left with very little cash (approx £5k). However, she did also inherit their home and a small holiday cabin in the Lake District (mortgage paid on both).

In the final few years of his life, my step father's business was struggling and he basically maxed out his credit lines. In order to help, my mother used her credit facilities (credit cards and loans) to help the business out. Now, after his death, because there was no way of proving that all of her own debt was for his use, she wasn't able to include her debt in the probate process.

As a result, she's left with approx £23k of her own debt (after paying some off with the £5k cash she received). However, that leaves her with NO liquid cash from the inheritence, and due to her own debt she has no savings of her own either.

My mother is registered as disabled due to be a kidney transplant patient and she is unable to work. She receives disability benefits, and these are her only source of income. I pay her a couple of hundred pounds of 'housekeeping'/rent money at the moment, although that is due to stop in the next couple of months as I'm looking to buy a house and move out.

Her problem is that due to taking on the household bills that my step-father used to pay, paying for several essential household matienance bills (the house is quite old - pre-1900), her own debt is crippling her.

She's up to her overdraft limit and often goes over it causing her monthly direct debits for bills/credit cards to be rejected. Of course, the banks/card companies than charge her fees and her debt increases!

She's in the process of reclaiming her bank fees, which may help her slightly, but she'll still struggle.

The main problem is that her income just doesn't cover her monthly payments for her bills/debts, and the problem will increase once I buy my own home and stop paying her 'rent'.

She's really at the end of her tether and she's becoming really ill due to the stress of everything. She's cut out all unecessary spending, and virtually all of her income is going her bills/debts. She's also been in touch with her creditors to explain the situation and a couple of them have given her interest 'holidays' for the next few months, but this won't help her much in the long run.

She's considering debt management companies and selling equity in her house to various companies. As her only child, I *really* don't want her to go down these routes if possible as I'd rather she had the security of her own home. Equally, she doesn't want to sell her home (due to the emotional attachment of it being her home with my step-father), not does she want to sell the cabin as it is the only place she can 'get away' from everything and she has a lot of friends in neighbouring cabins who have really helped her out over the past couple of years.

I realize that you'd probably need more specific details, but does anyone have any suggestions as to what she could do for help? I know she's incurred the debt herself, but it wasn't really 'her fault' and she's just found herself in this situation and doesn't know what to do. The stress of losing my step-father was bad enough, but all of this on top is close to giving her a break down!

If she could just get to a situation where she can manage her debts on a monthly basis and hopefully keep her house/cabin, then that'd be a solution! Even if it took 15+ years!

Thanks in advance,

Brian..

RAS

her starting point is to look at one of the debt charities listed here http://www.moneysavingexpert.com/loans/debt-help-plan#help

She also needs to seriously consider getting a lodger as the first £4000or so is tax free income.

brian.wainwright_2

Hi RAS,

Thanks for the link - not sure how I missed that on the main site!

I'd actually already asked her to go to the CAB and she's looking to make an appointment with someone this week, so that's a good start.

I know where you're coming from with the lodger suggestion, but she's in her mid-50's, on her own and not in the peak of health and I know that she won't entertain the idea. She's not the most confident person and I've had to be in the house when she's had workmen in recently as she doesn't like being alone with them, so there's no way she'd have a lodger stay in the house - which is a pity as room rental rates are pretty high in our area! I actually think she'd prefer to go down the debt management company or equity release scheme route than rent a room out.

WASHER

Take professional advice on equity release schemes before committing. They are not always what they seem.

The CAB will be able to advise on these as well as the debts, do ask them for their advice.

CLAPTON

how old is she?
why can't see sell the Lakes property?.. how much is it worth?

WASHER

CLAPTON wrote: »

how old is she?
why can't see sell the Lakes property?.. how much is it worth?

I would personally sell the Lakes property too, why enter into a DMP or struggle with debt if you really don't need to. Just my thoughts.

brian.wainwright_2

WASHER - I see equity release schemes as something of a last resort to be honest, and I don't completely trust what I've read about them. However, I'll take your advice and speak to the CAB about them before acting on anything.

I've also suggested that she sells the Lake's property - it costs her close to £2k a year for 'site fees' and now my step-father's passed, she doesn't use it enough to justify those fee in my opinion. However, she's still emotionally attached to it and sees it as a 'retreat' to get away from all her current problems.

I have to explain that my mother's a VERY emotional person who's been through a lot in the past 3 years, and she's still clinging on to anything connected to my step-father.

I've suggested several times that she sells the Lakes property, but she is VERY reluctant to. Aside from the emotional attachments she's got to it, she does see that it's probably the most sensible option, but she insists that she needs money now and that it'd take a long time to sell the cabin. Aparently there are other (cheaper) cabins on the site and no one's buying them at the moment given the current ecconomic climate, so she thinks that her's either wouldn't sell or she'd have to make a huge loss on it.

I believe the cabin was valued at around £80k for the purposes of the probate, although I couldn't guess it's current value now.

WASHER

Could your mother rent the cabin out in the short term? It would certainly help with her situation just now and she could rent it on a 6 month tenancy, so she would be able to use it for the other 6 months of the year, or rent it as holiday accomodation.

misspoppy

Hi

I think the CAB will probably help her see that this is probably going to be the best option sounds like she could do with some greif counselling I'm sure she probably knows what she needs to do but while she can put it off she will.. Make sure you go with her to the apt.

Good luck

brian.wainwright_2

I'll certainly talk to her about the possibility of renting the cabin out, but I believe that the terms of the site it's on do not officially allow people to rent out their cabins. However, I believe that some of her friends on the same site rent their cabins to "family and friends".

However, I think this is to prevent the cabin owners having the cabins as commercial ventures (the site rent their own cabins for visitng holiday makers). There may be a possibility of almost 'sub-letting' the cabin to a 3rd party for a 6 month period. That's a good suggestion - something I'd not thought of, thanks!

brian.wainwright_2

Hi misspoppy,

Yes, she really does need grief councilling, but she point blank refuses to have any. But that's another story!

She doesn't want to goto the CAB on her own as she gets easily stressed dealling with anything to do with finances/debt - she often feels her privacy is being violated and often embarresed that she's in this situation. So, I've agreed to go with her if she can get an appointment next week (I'm working away from home this week).