Debt Dilemna

Blue_Lou

Hi,

I am looking after my stepdads finances, he currently has an egg card with £2850 to pay, it has a 3500 limit. This is a result of consolidating all credit card bills onto a 0% card.

He also has a loan from TSB that was for £8000 at 12.29%. (I have posted a letter to request cancellation of PPI today - hoping to receive a cheque of aprox £500 - fingers crossed). He is into month 29 of 84 on the loan. He pays £183 a month for this (this is too high - he can barely afford it).

The egg card is 0% until 1st October (16.9% thereafter) on balance transfers, in September he will receive £5000 from investments (I know.. I know clear debts before you save). The problem is trying to figure out how best to stretch the money.

Would it be worth transferring 750 from egg card to pay some of the loan (fee of £15 for balance transfer) to try and reduce loan payments or should it be left on the egg card?

We have looked into the possibility of obtaining a loan with a lower APR, in particular the egg loan - however he has missed 4 payments on his platinum credit card in the past nine months so this will obviously count against him.

We (I) am trying to repair his credit profile, we have cancelled any unused credit cards, consolidated all cc debts onto the egg card, paid off two loans in full, settled a default - however I still feel that these missed payments will affect the outcome of the loan application in a major way.

Any help will be appreciated.

lynzpower

hi tyerte blue lou

How come hes not here sorting this problem out? It doesnt seem fair that youve been lumbered with this problem

Blue_Lou

Unfortunately, He suffered a stroke in 2002 and can't really manage his finances adequately anymore.

southernscouser

It's difficult to give a proper diagnosis if you like, without a full SOA! :think:

You say he can barely afford to pay the loan. Does this mean that he is able to at the moment without getting into further debt? Obviously in September he will be in a much better position with the £5,000 coming to him!

Blue_Lou

Income:

£722 Disability Living Allowance/Incapacity Benefit

Expenditure:

Please note - this is predicted expenditure as of next month.

I have chopped and changed a lot of things, for example his mobile phone bill was £80 this month - we have adjusted the contract and now it is a flat fee of £30.

The broadband package he was on was 27.99 per month, I have now changed it to 17.99.

He would often receive charges from TSB for paying credit card late. I have now set up a direct debit for him to take minimum payment automatically. We have also stuck all the balance on a 0% card (see above).

The phone bill is now direct debit through post office homephone (we can cancel anytime and we may be tempted to move to primus for free weekend and evening calls).

Setup direct debits for all household bills such as Gas/Elec - again to avoid late payment fines - the money outgoing is slightly higher than what he would pay on a bill - this is so he does not receive a shock at the end of the year when he sees the balance.

Water/TV LICENSE/COUNCIL TAX/ ALL INSURANCE - now direct debit to avoid late fines.


HOUSEHOLD BILLS

gas 60
electric 40
water 28.33
phone 30

TAXES

tv license 10.99
council tax 85


INSURANCE

contents insurance 12.3 - this beat the quote from last year by over £200
building insurance 14.81 - see above - we used confused.com
firstassist 8.7
pinnacle insurance 7.95
london life ltd 4.52

I do not know what the last three are, I think they are life, health and retirement policy. They come to less than £25 per month and I fear that if we cancel one of them, something drastic may happen to his health (or worse).

LOANS

loansdirect 183.92 - this was a loan he took out to buy into a property in cyprus, he later found it to be a timeshare (and a bad idea), decided against purchase and this money has slowly disappeared . There is £8500 owing, the final settlement fee today was around £7900.


The following loans have been paid off saving £70 per month and have saved £445 in interest.

GE Money - 1400 - We paid this off in full, saving £300 in interest.

MBNA - Also paid off - loan was for £1000. Paid settlement figure of £1175 saving £145 in interest.


LUXURY ITEMS

sky 30 - called sky and downgraded from sky world (saving £12 per month)
internet 17.99 - adjusted internet package (saving £10 per month)
mobile phone 30 - (moved to contract - saving £50 per month)

TOTAL OUTGOINGS 564.51


Leaving £157 for other expenses such as food.

The main problem with my stepdad is he likes to see money in his current account, he had 3,000 in his current account and around £5,000 credit card debts prior to me having a word with him about it. He does not see the bigger picture.

As I said earlier, we have been looking to get a lower rate loan, I used the egg calculator and decided it would save a lot of money if we could get a lower apr loan. We would save £40 per month and finish the loan a year early.

I mentioned above that I am trying to repair his credit file, we have paid a default off, closed four credit cards off. Regrettably, three of these were MBNA so I feel we could have got a better deal from them - still, six months down the line he may be eligible for better deals. The other was a capital one card that had not been used since 2001.

The only things to pay off now are this TSB Loan (12.29% APR) and egg card debt.

I apoligise if the above is irrelevent, but you did want to see a SOA. I would really appreciate some advice on what to do with that 750 credit from egg card - should it be used to pay some of the loan off?

bargainbetty

Hiya,

You could call TSB and ask about overpayments - check to see if there are penalties first, and ask them to work out if it would make a significant difference to the overall balance. Some loans are front-loaded with interest, so paying off early doesn't make much change to the overall amount.

If they do allow overpayments, make sure you aren't limited in the number you can make - it would be terrible to pay £700 odd now, and then not be able to use the £5k in September!

Alternatively, call Egg and ask them to lower the limit, so it can't be spent again - remove the temptation?

Hope this helps - got to be worth a shot.
x

Blue_Lou

bargainbetty wrote:

If they do allow overpayments, make sure you aren't limited in the number you can make - it would be terrible to pay £700 odd now, and then not be able to use the £5k in September!

I have done this - they accept unlimited overpayments with no additional charge, luckily

lynzpower

Brill :T

Is there anything your dad can sell to help him along, ebay? Loot? Amazon?

Blue_Lou

Unfortunately not, most of it is old junk.

lynzpower

LOL, most of the stuff Ive sold is old junk as well, you might be suprised what sells, I certainly was!

newleaf

I haven't anything practical to add, just want to say you seem to have made a huge improvement to his situation already, and he is very lucky to have you on his side. Well done.