Problem with husband's debt...

Pitlanepiglet

Hi all, a post for a friend who doesn't want to post herself as she is worried about her husband knowing that she is posting - I've told her that I'm sure you lovely people will have some good advice.

Her husband is unemployed but isn't entitled to any job seekers etc as his last employment was self employed but he didn't earn enough over whatever the period is to be able to claim anything (hope that makes sense - it's all a bit second hand). He is trying to find work but he is over 50 and there is nothing available in their area.

He has debt from before they were together, she has been paying this debt for a number of years and she is now struggling to pay his debt along with their rent and outgoings as she has taken a wage cut to keep her job. They don't get any benefits, they don't have children and she earns too much for them to get anything.

She's starting to feel really desperate about their situation as she can't manage to service the debt. She had debt but has managed to clear it and now has no debt other than a small student loan.

What can they do - the debt is his and he has no income, it's a bank loan (HSBC I think but I'll check) - it's around £5,000 at the moment.

How do they best deal with this - presumably if he rings his bank and says "can't pay" - they'll just laugh so does he need some proposition to take to them? Can he try to pay less without the interest increasing?

Thanks in advance (and hugs to my friend who will be watching this thread x )

savingmummy

I am no expert on here but i didnt want to read and run.
If he has a protection on the loan (payed an extra amount for illness, loss of earnings etc) he may be able to sort it out with the bank.
He can change the monthly repayments but i dont think the interest will lessen.

Hopefully some top mser`s will help you/your friend out, goodluck x

toptotty11177

The first and most important thing he should do is contact the issuing bank and explain the situation.
Go with an offer of payment, even if its only a few pounds a week/month.
They will accept the payment, no problem. No bank would take you to court when you have made an offer of payment as it would just be thrown out.
Dont offer a silly amount, offer what you can afford. You may have to fill a means form in to prove that its all you can afford.
Once you have agreed the payment amount you must stick to it, if you dont you will end up in court pretty quickly.
As long as you offer a payment and stick to it your credit rating shouldnt be badly affected either.
Hope this helps x

Pitlanepiglet

Hi Savingmummy, thanks for the response, there is no insurance - he had some that paid out when he was initially made redundant a few years ago but he has been self employed since then.

Pitlanepiglet

Thanks toptotty, will they freeze the interest? My friend is really worried that it will just all get rolled up and they will end up in even more debt. He can't ofer to pay anything as he's got no income - will she have to fill in a means form?

Ames

If it's his debt then her income has nothing to do with it. He needs to offer £1 a month. They wont like it, and after pushing for more they'll sell it onto a debt collection agency. Then interest and charges will stop. All he can pay is £1 a month, so that's all they can have! His credit rating will be shot to hell, but there doesn't seem to be much option there.

Rent, bills and food are priorities. unsecured loans aren't.

RAS

Hi

There are several angles on this

1. Please can your friend check whether she can get any working tax credit now that OH is not working. Go to www.entitledto.com for a basic check. Even if she only get a few quid, that can open other doors.

He needs to sign on to get his NI contributions contributed or it will wreck his future pension entitlements (and possibly future entitlement to other benefits).

2. His debt is his debt and she is not obliged to pay it nor can they use her income to assess his means. He needs to contact the bank and make a token payment (£1) each month.

3. Her priorities are to pay the rent/mortgage, council tax, utilties and food. Can she afford those?

4. He needs to look outside the box for other means of earning money. If he does notmhave internet access, he can sign on at the local library and do clicks and surveys. It may only be £20-30 per month but it would cover the token and help fund job-hunting. Most jobs now seem to be on-line, posted in company windows or via agencies and even a few days work would help.

Pitlanepiglet

Thanks RAS, they've checked re benefits, she earns too much for them to get anything as they are childless.

I'll remind them to check about his NI although she says hubby had a letter that said that he had contributed the maximum so I guess they need to check whether he does need to pay anymore?

She can just about pay the rent, council tax etc. but it takes all her income. She's cut loads of corners, she does the OS Grocery challenge and has got pretty good at paring the expenses down.
4. is a good idea. They have internet access.

She spoke to her Employee Assistance Programme today and they told her to get hubby to ring and talk to them. She managed to persuade him to do so and CCCS are ringing him back next week apparently. So that's good progress :T

I've done some research today for them and it does appear that as the debt is small (by modern terms!) the only real option is to try to negotate with the bank to take a token payment but there is no obligation on the bank to freeze interest?

Pitlanepiglet

Sorry to bump this back up...they've made some progress, her hubby has started dealing with this quite enthusiastically....he's got a phone appointment with CCCS for Monday, he's opened a new bank account and they are in the process of closing their joint account. Am I right in thinking that it's OK for her to keep him as a second credit card holder on her CC account (spending isn't an issue now it's just an emergency card)?

She's having a bit of a wobble though. She's terrified of the idea of not paying the loan. She's always fought really hard to pay the debt that they have and is scared that it is all going off the rails but she knows that the reality is that she can't pay the loan without incurring further debt.

Am I right in thinking that what's likely to happen is that the bank (I was wrong, it's Nat West), will have to accept the £1 payment as he has no income. They are likely to continue to apply interest (and charges?) but that at some point (sooner as it's such a small payment?) they will flog the debt off to a DCA at which point interest and charges stop but the harrasment will step up?

Will Natwest or the DCA be able to take him to Court if he continues to pay his £1? She's worried that he'll get a CCJ...

Thanks all, I've never spent much time over on the Debt Free boards, I'm an Old Styler and tend to live over there. You guys are fantastic though, such great support and vast amounts of info! Big hugs to everyone for a frugal Cristmas!

RAS

PLP

Your friend's hubby needs three documents (although he may not have received two yet), the original Consumer Credit Agreement, the default etter and the termination letter. If there are faults with any of these, then hubby has a defence if the bank take legal action.

If they have been paying the loan to date, the default letter may not come for three months or so. The important thing for them to understand is that this will demand the whole sum owing but that the bank does not really expect them to pay it. It is a legal nicety that has to be doen so that they can terminate the account.

Pitlanepiglet

Hello all, sorry to bump again. Friend's hubby spoke to CCCS today and didn't find them very helpful, by the sounds of things they were very focussed on friend's income as a solution to the debt problem. Apparently she should be giving him more money so that he can do things like go to the cinema! She wasn't very impressed with that as a concept when she's scrabbling around to make ends meet anyway!

I guess the problem is that the CCCS see the debt as a joint debt where as to some extent my friend has got to the view that she has paid this loan for the last four or so years (give or take a bit) as hubby hasn't been able to pay it. She has got the the point of thinking that it's his debt, the bank happily loaned him money to !!!! up the wall with no security (it was an overdraft conversion loan.) and it's getting to the point where she feels that it's the bank's problem if he can't pay it back- that's the risk they take by lending in these situations.

CCCS suggested that Natwest would probably go straight for a CCJ, I wondered if that would be the case as he has no assets? I don't suppose really it makes any difference to him credit wise in the future whether it's a CCJ or a default?

I need to talk to them a bit more at the weekend but they seemed a bit at a loss to know how to go forward, I guess part of the problem is that she could probably pay the loan by cutting some more corners but she doesn't really want to - she's worried about how that makes her look....