Worried-brother's Capital One debt

Phillsis81

Hello All

I have been lurking on this site for several years, mainly hanging out in the old style moneysaving and DFW forums, but have been motivated to register at last out of worry for my brother and hope some of you kind people can help.

Basically my brother is in his 20s living in the city and has accumulated debt through a Capital One card. He only told me as I was visiting and he mentioned he was getting phone calls all the time from them hassling him to pay. I then had a look at his mail and realised he has got to the point of ignoring letters from them and hoping it will go away.

I opened the latest mailing which says he has gone over his £800 credit limit by £200 and has 28 days to pay they say they will terminate his account and issue him with a statement of default. I feel sick.

I am a single mum but with the help of this site have managed to save a bit of money. I could use £1000 to pay off this debt is that the best thing I could do for him? Obviously this will be a big hit on my savings but I can't bear to think of them heaping interest on to interest. I looked on the national debtline and saw the option of offering full and final settlement negotiating with Capital One, is this a better option?

Thanks for any help you can give.
Phillsis x

borders_dude

I wouldnt bail anyone out like that.

I think people learn a better lesson if they have to sort themselves out, and get themselves out of a hole. Im sure he would appreciate some moral support though.

izools

DON'T BAIL HIM OUT! But also don't worry about it, £1,000 is very little in the greater scheme of things.

To be honest, if he gets a default, it will stop him from being able to get large amounts of credit for six years which is a good thing if he is just ignorin the letters at the moment.

Wait for the account to default, when it does, they will be in a much more amienable state to make offers of payment.

For a balance as little as £1,000 they would probably be happy taking £5 a week and when the account defaults the interest will stopp accruing also.

Don't worry though, one small default on his credit report won't have a huge effect. He probably won't be able to get a mobile phone from another network for a year or so, nor be able to get a chequeing account for two or three years if he decides to move bank.

I think the best thing to do is reassure him that it is OK, wait for the default notice, and sit with him whilst he calls Capital One (or the debt collection agency) to set up a payment arrangement of £5 a week or whatever.

Once this has been done, get him to call his bank to set up a standing order, and that's it. Nothing to worry about the debt will take care of itself with no more hasstle from Cap 1 or a debt collection agency...

... Ignore it however, and they will end up serving a court order on him and if he ignores that a CCJ will follow, and if he ignores that possibly either a Notice of Execution wherby baliffs can enter the property or a Garnishee order wherby the debt is repaid out of his paycheque.

DON'T PANIC as it takes a good year or so for a debt to reach this point, and for a debt as small as £1,000 capital one would probably give up before this anyway...

Good luck! And keep us posted

Phillsis81

Hi both
Thanks for the replies, I have been very worried about this situation and you are helping me to get some perspective. When it is my wee brother it is hard not to get emotional and want to fix things for him. My OH thinks I should not bail him out either because it won't teach him how to deal with things himself, although my plan was to ask him to pay me back £10pm for the next decade, is it really better to default? I am quite scared of debt and letters like that scare me.

So, the plan is to get him to open his mail, work out his monthly budget so he can see what he can afford to offer them, when he gets the default letter he must phone them and offer to pay £5pw and see if they accept, then set up a standing order from the bank...and of course get him using this site!

Thanks for your help, will let you know how it goes. He can be a bit prickly to speak to about things, hopefully he will understand I am trying to help!
Phillsis x

izools

Maybe a bottle of vino will help the afternoon go more smoothly?

It can be a bit tricky talking to creditors / DCAs about payment plans, but they tend to be more likely to accept a reduced offer with a defaulted account than otherwise.

Remember - if you bail him out and the account doesn't default, there will be nothing much stopping him accruing more debt. He needs to learn the consequences - and have a marker on his credit file to stop him getting deeper in trouble - cruel to be kind and all that

Good luck, and keep us posted!

TFD_2

I disagree a bit here.

I wouldn't suggest you clear the card, but likewise if you can help him avoid f*cking up his credit rating for the sake of a few hundred quid, then why not? Who knows what his situation will be in the next few years, and a default is never a good thing!

If it was my brother, I'd LEND him the cash to get the account straight - i.e. within credit limit, on the basis that he sets up a direct debit for slightly more than the minimum payment - so the balance reduces, and cut the card up.

You know how reliable he is, and your financial situation better than anybody else though.

Judith_W

I don't know much about the effect on credit rating if you get a default. Just a thought about another option, perhaps paying off the excess and a bit eg £300, to get him below the limit with a bit of a buffer then get him to set up a standing order to CC and yourself to pay it off. Obv taking the card off him so he can't creep up again.

Just a thought, tho I do understand the reason behind getting a default to stop him doing it again. I think it depends whether a bit of advice would be enough to help him get his finances sorted and not do it again, or whether he needs the restriction on his rating to prevent it happening again...

digitalphase

Why not lend him £300 to get the account back under its limit, then sit him down and work out a budget so he can try and chuck £100 odd at it a month to clear it. That way you're not completely bailing him out, but enabling him to get some breathing space without the restrictions of a default, but also making him stand up to things and pay the rest off.

If he acrues this debt again and/or doesn't pay you back you will know never to help him again

TFD_2

Judith_W wrote: »

I don't know much about the effect on credit rating if you get a default. Just a thought about another option, perhaps paying off the excess and a bit eg £300, to get him below the limit with a bit of a buffer then get him to set up a standing order to CC and yourself to pay it off. Obv taking the card off him so he can't creep up again.

Just a thought, tho I do understand the reason behind getting a default to stop him doing it again. I think it depends whether a bit of advice would be enough to help him get his finances sorted and not do it again, or whether he needs the restriction on his rating to prevent it happening again...

digitalphase wrote: »

Why not lend him £300 to get the account back under its limit, then sit him down and work out a budget so he can try and chuck £100 odd at it a month to clear it. That way you're not completely bailing him out, but enabling him to get some breathing space without the restrictions of a default, but also making him stand up to things and pay the rest off.

If he acrues this debt again and/or doesn't pay you back you will know never to help him again

Ok so basically what I said

Phillsis81

Hello

Thanks so much for all your replies, I really appreciate it. I can't speak to him face to face as we live several hundred miles apart. Last night I emailed him and asked him when would be convenient for me to phone him to discuss his options. I said he needed to be honest with me about exactly how much the debt is, plus what his overdraft on his current account is and I would help him as much as I can. He has not yet replied, I hope he is not annoyed at me interfering.

I am in a quandary about letting him default when I could give him a few hundred to tide him over and get him back within his credit limit. I love him to bits, but on the other hand he has always been a bit rubbish with money. What I have saved, I have saved through hard graft so the hard hearted bit of me thinks why should I give it away and would he do the same for me?

I will keep you posted on what happens, he is running out of time if he is not going to default as the letter was dated 1 Oct and gave him 28 days to pay up.
Thanks all.
Phillsis x
PS If I do give him money I will be asking for it back say at £10pm for the forseeable future!

cakey

Hey Philssis, having read your posts, i really understand where you are coming from. i know you want to put it right... but as an afterthought, what if you make it worse. What if he takes your money and then racks up the card to the max again. Putting him under the limit is a good idea, but you have to be prepared to never see that money again. and if you do choose to do that i would strongly advise you asking him to close the account and pay DD every month to clear the remaining balance. Never lend anything you can afford to lose, especially with family, you dont want to ruin your relationship with him or fall out if he cant repay in the future can you get his details then put an SOA on here?