Trying to sort out my daughter's financial mess

Hootie19

My head is absolutely spinning with this.


My daughter has been in financial difficulties for quite some time now, but has only just come clean with me as to how bad it is, and has asked me to help her. Frankly I'm not sure I can, but I've said I will try.

She has problems with her bank, her credit card company and her car loan company. She has agreed to hand over her finances entirely to me, so can she give these companies notice that all communications are now to be with me? If so, would they accept this verbally so that I can talk to them straight away (with her making the initial call and then handing the phone to me) or would they need something in writing first?

She has a mobile phone contract with Orange. I've worked out the average monthly charge, from the incomplete statements she has given me, and it ranges between £25.17 and £43.21 a month, with an average for the 8 monthly statements she can find, of £33.19 per month. I never have been able to understand the bills for mobile phones, so I'm struggling to work out where the amounts have come from, but nevertheless, that's what they are.

It looks like the contract started in April 2009, and it is an 18 month contract (Dolphin plan) so looks to have 8 months remaining.

I don't even know if Orange do a cheaper contract than that one, but if they do, and before I get her to ring them to ask, is it likely that they would allow her to go down to a cheaper contract for the last 8 months. After that time, I will get her to cancel the contract and go PAYG.


All her paperwork is rather haphazard, and at the moment I'm just trying to separate everything out into piles and then into date order.

She is 22 years old, lives at home, has no assets other than her car, which she bought in June 2009 and which she needs in order to do her job (ok, she doesn't need *that* car, but she does need *a* car), and has worked for her employer since November last year. She thought the job was full time, but it has since transpired that it is anything but. Her job is family care worker, and involves, amongst other things, driving children with special needs to and from various locations in the town, so a car is essential.

Her four payslips have been for £606.59, £341.18, £445.37 and £344.57, an average of £434.43 per month.




SOA

Income - £434.43 (average)

Outgoings
Car loan - £192.53. (Hire Purchase.) This is with Royal Bank of Scotland, over 60 months and has an APR of 16.4%. Loan taken out June/July 2009

Car Insurance - £140 (business insurance – driving only since Sept 08) – not sure of the exact sum (due out of bank next week, but that’s roughly the amount) will know exactly when the direct debit has been taken and we can get a mini statement from the bank)

Mobile phone – £33.19 (average)

Petrol – really no idea. Bank statements are incomplete so can’t see from there where she’s spent money at the petrol station, and some have been in cash with some receipts submitted to employer for reimbursement. Will now be getting her to give all receipts to me.

Credit card - no idea. Can’t find much paperwork, other than default notices on an agreement she made. It’s a Nationwide credit card with a balance of around £1,300. Looks like the APR is 19.9%. Letters have been received from KPR Debt Collections.


I don't even know what advice, if any, you are able to offer, but I hope the above is enough for some initial advice at least. I’m not sure, under the terms of her credit agreement for the car, if she can cancel it, and if she does, if this means that she has to just hand the car back (in which case she’s even worse off as then she won’t have a car to do her job) or how that can be dealt with in any way.

She has been applying for additional work and has asked her employer for more calls to increase her income, but so far, has had no success.

Tomorrow, she will go out and put cards in newagents' windows etc, offering babysitting, and although it's not a lot, I will also get her to sign up with sites like FatCheese and Quidco, and try and earn a few pennies from their free daily clicks.

Obviously we are not even thinking about asking for any board money from her, but we will be expecting to earn her keep in the house.

If I was starting off with her next salary payment and a clean slate with the companies she owes money to, I think I could deal with it, but thinking about trying to repay the money she owes is just feeling overwhelming to me at the moment.

Oh, something else I forgot. She used to bank with Nationwide and had a £400 overdraft with them, which they have withdrawn, so that also has to be paid back.

Unfortunately, we are not in a position to help her financially, as we are struggling ourselves, as I was made redundant in November last year and am only receiving JSA. Our credit rating is poor (slowly rebuilding it) so can't really do much for her.

I am interested to know exactly what her creditors can do to get their money back, given that she has no assets other than her car. Everything she has in her bedroom (tv, DVD, ipod, laptop etc,) belongs to us - she's just borrowing them.

I fully intend to make her repay every penny she owes. I'm not interested in getting her out of any of her debts. (I've not even listed the amounts she owes to me and her dad!)

GeorgeUK

Sounds scary Hootie, good luck with this.

With regards the car, is it on HP or is it a loan she got. If on HP she can hand the car back at any time and be liable for only 50% of the initial cost - the car still belongs to the company until she pays off the debt. If it's a loan then she owns the car and may be able to sell it.

It doesn't look like she can offord the basic bills let alone repay outstanding debts. Instead of trying to find extra work, can she find a totally new job? She can't afford to stay there if the pay fluctuates like that.

Have you tried putting the details into the soacalculator? I know most of the fields would be blank, but i just deleted them when i did it. Makes things a little easier to follow, especially when it comes to tallying up all the debts and calculating what any defecit may be per month.
http://www.makesenseofcards.com/soacalc.html

bugbabe1970

Hi, its unlikely that Orange will release her from the contract but you could ring them and have a go. The amount is different each month because some months she uses the phone more than others Say she has a contact for £20 and she goes over her allowance then she will be charged Orange also charge for itemised bills and little extras like message delivery notices etc.

Cant really help with any of the other things but I'm sure someone will come along who can.

Good luck. You're daughter is very lucky to have you.

MissPop

Why on Earth are you sorting out her mess? Methinks if she got herself into it, she needs to get herself out of it...

Oneday77

MissPop wrote: »

Why on Earth are you sorting out her mess? Methinks if she got herself into it, she needs to get herself out of it...

That's a bit like saying why bother coming here and asking us, your problem you mess. Read my signature and then think before you repost will you please.

OP it isn't easy but I am sure you will get there.

I would start by getting a copy of you DD employment contract. If it states she is on full time employment she sure isn't meeting minimum wage.
Failing that she does need to start looking for another job. Can she do any bar\waiting work. The supermarkets are always looking for staff. Now I know every area is different but jobs are there if your willing to do them, not always the ideal job but it could help her find her feet. What about evening pizza\chinese\indian take away deliveries.

As far as Orange goes, get her registered for online billing and read through every charge that doesn't have a 0.00 against it and tell her to stop making those calls\texts, picture messages at 25p a shot are common suspects.

If she is driving as part of her job is she getting proper travel expenses, pretty sure it is about 35p per mile she can claim for. If she is only getting petrol costs then she is actually losing money doing this job.

Car wise, sorry George, she has to have paid at least half of the car including initial deposit before she can hand it back, assuming it is secured on it that is.

For the actual loans\debts\CC\OD visit www.makesnseofcards.co.uk/snowball.html and work out the debts that need payments made towards them first, as and when she has extra spare that is.

Car wise her insurance is extortionate, I would expect a lot less for a 22yo with at least 1years NCD. Shop about. Again if she only gets petrol costs at pump prices then this job she has is costing her extra on business cover for no gain.

Sure others will point out some ideas where savings can be made.

joeblack066

Well as a parent I can fully understand why you're helping her, so try to ignore unhelpful replies!

If your daughter initiates the contact with the companies concerned, then asks them if they'll speak to you in the same phone call, then they probably will.

You need to get all of this in some kind of order;

Which are the 'priority' debts? ie the ones that have gone to debt collection agencies? Call these and make an offer of payment that you know can be afforded.

Check whether the car is on HP or loan for reasons stated previously. Be very wary of haning it back as she will still owe a lot of money on it and will have no car!
As it appears to me, her outgoings are;
Car Loan £192.53
Insurance £140.00
Mobile £ 30.00 (If she is on orange Dolphin 30 this is the price with 100 minutes an200 texts included.She must be
going over these and needs to STOP!)
Petrol £0.00 Work petrol reimbursed by employer
£20.00 She needs to stick to a limit every month of what she spends on petrol, and walk everywhere else!
Car £30.00 She needs to put this away every month to cover
road tax, MOT, repairs, at the very minimum
C/Card £75.00 Her minimum payment is liable to be around £65,
but I have upped this a little to try and avoid the
minimum only as that is never good!
O/D £ 40.00 Ask Nationwide if they will accept the O/D being
cleared over 10 months.

Total £527.53 against an average income of £ 434.43, therefore she has a shortfall of £93.10 per month, or £21.48 per week. So her option is without doubt to up her income. She either needs a second job, or to find a way to utilise the skills that she has make another £21 a week....not impossible at all imho.

As she already works with children with additional needs, her best bet may be to register with an agency dealinh with social care. The average hourly rate is between £9 and £12 per hour, and many also do sleep in shifts that are paid at £25/£30. So for instance if she di 1 x 8hr shift a week, at £9 per hour, even after tax and NI, she would clear £50, more than enough to cover the shortfall and give you guys a bit of board and a cheap night out with her mates!
Other than that theres looking for any other part time income, inc Betterware, Avon etc, but she should be using her skills, they're in demand all over the country.

Hope this helps.

Joe

niksyg

An idea on the car front...
I had a car on a HP agreement, I needed to buy somethingmore economical but still owed £3000 on the car. So, I went to a garage, and they gave me £3000 for my car which went directly to the finance company and so that debt was settled. I then took out new finace for a car I got from them which worked out much cheaper all round.

I can understand why you want to help your daughter, and she is very lucky to have supportive parents.

I second all that joeblack066 has said.

You can get copies of your daughter's bank statements from the bank so that you can sit down and throughly go through them seeing where she is spending and not thinking about what she is spending money on.

I think looking for a new job is definitely a good idea.

Good luck with it all and hopefully your daughter will learn a valuable lesson from this....

joeblack066

If a car is on HP, it is not yours to sell, it belings to the dealer until the final payment is made, hence the term HIRE purchase. In the eyes of the law it is the same as selling on a rental car! If it is on a personal loan then you can sell it on if the amount that you get is enough to cover the loan, and of course buy a new car so that she can still do her job! Dont sell if its on HP tho!! Tis a crime! Hopefully, Nyksig, your car was actually on a personal loan!! ;o)

SkintGypsy

Hootie, I totally understand why you are helping her, you are her mother and that's what we do, however that is a very different thing to doing it for her. By making it go away and taking any away any of the difficulties that her situation brings, means that she is not learning the lesson that she could do well to learn this early on in life. I wish I had financially savvy parents that had taught me about money, and deal with things like this, cos if I had I wouldn't have got myself into such a state (see sig!)

I think the best you can do for her is to guide her through, with the help of this site, but make her face up to it by doing her SOA and talking to her creditors if it comes to that. Show her how much harder it is to get out of debt than into it, and that the less monthly commitments she has the better.

I have bought a book about how to teach my kids about money, so I can do more for them than was done for me.

Good luck.

niksyg

joeblack066 wrote: »

If a car is on HP, it is not yours to sell, it belings to the dealer until the final payment is made, hence the term HIRE purchase. In the eyes of the law it is the same as selling on a rental car! If it is on a personal loan then you can sell it on if the amount that you get is enough to cover the loan, and of course buy a new car so that she can still do her job! Dont sell if its on HP tho!! Tis a crime! Hopefully, Nyksig, your car was actually on a personal loan!! ;o)

I am pretty sure it was all above board, the dealership I got my new car from just settled the payment figure. The finance company seemed happy as they got their money...hang on, thinking about it, it may have been a loan as the car tecnically belonged to the finance company, not the dealer I originally got it from.

Anyway, OP I think the option is to concentrate on uppong your daughters income and reducing her unnecessary spending!

MissPop

All I'm saying is that she can't rely on her mum to sort everything out for her - of course people need support to get through stuff like this, but to hand it all over to her mum and say "You do it for me" seems a bit off to me.