A pensioner between a rock and a hard place

JanMGreen

I really could do with some good advice from other Wannabees please, as I feel stuck between a rock and a hard place.

Having managed to accumulate two debts – a Halifax overdraft limit of £1000 (which I almost reach at the end of every month) and also a Halifax credit card debt of £343.00. These may seem small fry compared to some people’s debts, but I am retired with only a state pension income of £520.00 per month (annual income £6240.00) which includes pension credit.

I have been trying to pay off about £40 of the overdraft every month, but as soon as my pension goes into my account it is swallowed up to pay off the overdraft, which then builds up again over the month.

Now that the Halifax is about to start charging those with an overdraft £1 a day for the privilege, I have managed to secure a Virgin 0% credit card and am in the process of getting a the balance of my Halifax credit card transferred to the Virgin card and also a money transfer of £1,200 to clear the Halifax overdraft and leave a little over in my account to return it to a state of credit. That will protect me from exorbitant interest rates for the next 16 months, but unless I can clear the debt before that time I shall then have to transfer the balance again to another 0% interest card.

The problem is that I really can’t see how I can ever manage to clear these debts and live within my means, as I’m not allowed to earn any additional income; if I did, I’d lose my pension credit and would have to pay more tax and also both my rent and council tax, which currently I don’t have to. I don’t own a car, nor do I have any other expensive drains on my funds which I could cut back on to save money. It’s really breadline living already for me.

Does anyone have any advice please?

McKneff

Hello Jan.
First of all i dont know how old you are but just thinking things around in my head, suppose you got a job at say £100 a week and you lose pension credit of say £20 a week, youre still £80 a week better off.

£250 is coming shortly from the heating allowance

If you are over 65 your tax allowance is over 9K so thats a plus if it applies to you.

Do yu have any jewellry you can sell or things that you no longer need to sell at an indoor car boot sale.

just a few thoughts.

JanMGreen

The only problem there is that if I get a job earning £100 I don't just lose my Pension Credit, I also start having to pay rent and council tax, which currently I don't have to because I'm receiving pension credit. I'd also have to pay for my dental treatment and full price on spectacles.

I guess this is what is known as the 'poverty trap'! I'm 63 but have (unpaid) caring commitments and also health problems, so couldn't go back to work full time again.

Horace

Try opening a basic account elsewhere (somewhere that isnt linked with the Halifax) and have your pension paid into that instead and treat the Halifax overdraft as a debt (have no overdraft facilities on your basic account).

Phill_555

Hello Jan. Firstly, you need to really analyse what you sped your money on, and will have to cut out anything non-essential. Your outgoings have to be lower than incomings to dig yourself out of the debt.

You've been clever in switching the credit card to a 0% interest and also avoided these new £1-a-day overdraft charges but it seems like you're going to have to glean some income from somewhere in order to live! Is there any chance of some inheritance anywhere in the near future? How about looking for cash-in-hand work?

Ames

is there a minimum amount you can earn before losing your benefits? I'm on Income Support and in theory I can earn £20 a week before it's affected. It's not a lot, but that'd be £80 a month extra, which given your low income would be significant. Or there's the up your income ideas, like scratchcards and bingo (I'm not sure how it works, you don't pay anything but you get money from it).

Also, you probably wouldn't lose all of your housing and council tax benefit if you lost your pension credits, as you'd still be on a low income. The calculations are complicated though, so it might be worth popping along to CAB or somewhere to get a check done, they'll be able to tell you at what point working makes you worse off.

worried_jim

Get another a/c with a bank that is not part of Lloyds banking group and stop using the Halifax a/c. Work out an amount that you can comfortably afford each month. Contact the Halifax and tell them your predicament, you are on a fixed income so there shouldn't be too much hassle and pay this into the a/c each month. If you have any problems arranging this, and don't agree to a larger amount that you may struggle with, contact a debt charity whilst paying in the payments that you can afford in the meantime so that they can see that you are willing- These are called token payments until an agreement is set in place.
I wish you all the best sorting this out and remeber to post any questions you may have so we can all offer help. Good luck Jim.
Edit- look at doing this first before you give up any benefits and return to work. Also if the debt isn't payable by you as there is no affordability it may be written off as Halifax know that your income will never increase and as you cant afford it today you wont be able to afford it tomorrow.

JanMGreen

You have all been so kind and helpful with your advice so far, thank you so much.

theoretica

I believe that selling personal possessions does not count as income for tax purposes (because you have already spent the money buying the items). While it is a hassle selling lots of cheap things, nearly everything you don't use anymore from kitchen utensils to paperback books will sell for something.

You need to make or save about three pounds a day to pay this off in 16 months- so every little step (not buying a magazine or cup of tea, or going a little longer between haircuts) can count towards each day's savings.

captainhaggis

Hi Jan,

Forgive me but I have to ask how you spend £520.00 a month when you have no rent or council tax to pay?

We all might be better equipped to help if you post an SOA for us to take a look at. I'm just thinking that without rent and council tax, £520.00 seems like a hefty 'disposable income' to have.

postingalwaysposting

captainhaggis wrote: »

Hi Jan,

Forgive me but I have to ask how you spend £520.00 a month when you have no rent or council tax to pay?

We all might be better equipped to help if you post an SOA for us to take a look at. I'm just thinking that without rent and council tax, £520.00 seems like a hefty 'disposable income' to have.

Hear hear, we all need a SOA to advise more. You state 'It’s really breadline living already for me.' yet you get rent, council tax, dentist, nhs and optical care free Not that I am saying your arnt entitled to these things. So £520 is effectively for debt repayments, heating/electric, food, entertainment, transport and personal items. Other than us seeing your SOA all I can advise is a spending diary where you write down everything you spend on anything...

Good luck anyways