OAP parents in serious debt: advice greatly appreciated! :o)

worrieddaughter_2

Hi everyone

I'm new to this site, so please be gentle with me

I hope that this post isn't too long - I wasn't sure as to how much detail to go into...

I'm posting because I'm worried about my parents: my mum's 62, and my dad's 65, and would really like some advice. I don't know the full 'truth' because my mum won't tell me everything. I only know what I've got from my dad, who doesn't deal with the finances, and the odd thing that I've picked up on from my mum. So the situation might be worse, and there's a slim chance it's better.

They've had a rough time due to my dad's ill health and the fact that my mum worked for a cowboy who owes her £30k in outstanding wages and damages (this has proved nigh on impossible to recover, as the court costs are prohibitive). I've only just found out that they remortgaged and took £20k in the past couple of years (cheers Lloyds bank for your excellent financial 'advice'!). Also, years back, in the 80's, they lost their home in the recession, then we rented, and then they started from scratch again: only about

Mum is working: £17k a year (big salary cut compared with her last job) including pension; Dad's pension is £9.6k/year. Dad hoped to work til 70, but ill health has forced him to retire. They were counting on his wages to pay mortgage off etc.

So per month income: roughly £2.3k

Outstanding mortgage is £45.6k; repayment £1k/month for 4 years 9 months (this is accurate)

I estimate overdrafts to be £3k on joint account, and their personal accounts

I estimate credit card debt to be between £15 and £25k (mum is secretive, but I once saw a c/card bill and the balance was £9k, and know that dad's c/card balance is £4.4k; I know that mum has at least two c/cards)

Other expenses: council/road tax, insurance, bills, petrol, food etc I estimate to be around £1.1k per month.

So, I know there's a big shortfall here. As before I even know what APR the c/cards or overdrafts are, there's only around £200 per month, and I know that my dad's credit card debt costs him £110 per month (leaving only £90 for the overdraft charges and any credit card debts of my mum's).

There is some light at the end of the tunnel however. My brother is due to start a contracting job (so, this is admittedly insecure) £100k per year on six month by six month contract. He is willing to take over the mortgage over 25 years, but to be honest, he is really bad with money too. Also, I'm worried about putting to much hope in this, as there is no guarentee that he'll be doing this contracting job after 6 months.

To illustrate how bad my brother is with money: he's been earning £30k plus for the past five years, was living at home (not paying my parents rent!!) and has no savings. He blows all his money the first weekend after he gets paid (!).

I'd love some advice to help them out without upsetting them. I can't really help much as I only earn £13k a year, and am expecting a baby (partner doing part-time work, only earning £6k a year). We have savings of £4k, and I'd willingly give it all to my parents, but I'm worried that it may be a case of 'throwing good money after bad'.

I'd love them to have a retirement, to go on the occasional holiday, to see their new grandchild etc... Don't know if any of this is possible!?!

Many thanks!

-A worried daughter:eek:

worrieddaughter_2

Hi everyone, I've guessed some of this, but I think it is quite accurate. I guess the next step is to convince my mum to tell me everything about the debt so that something can be done about it!

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1500
Partners monthly income after tax....... 800
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2300
Monthly Expense Details
Mortgage................................ 1000
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 120
Electricity............................. 50
Gas..................................... 60
Oil..................................... 0
Water rates............................. 45
Telephone (land line)................... 11
Mobile phone............................ 25
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 200
Clothing................................ 30
Petrol/diesel........................... 100
Road tax................................ 10
Car Insurance........................... 25
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 7
Pet insurance/vet bills................. 7
Buildings insurance..................... 17
Contents insurance...................... 12
Life assurance ......................... 60
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 25
Entertainment........................... 30
Holiday................................. 0
Emergency fund.......................... 15
Total monthly expenses.................. 1906

Assets
Cash.................................... 0
House value (Gross)..................... 170000
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 172000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 45600....(1000).....0
Total secured & HP debts...... 45600.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
CREDIT CARD....................4400......110.......0
CREDIT CARD....................9000......200.......0
CREDIT CARD....................5000......100.......0
OVERDRAFT......................1000......40........0
OVERDRAFT......................1000......40........0
OVERDRAFT......................700.......20........0
Total unsecured debts..........21100.....510.......-

Monthly Budget Summary
Total monthly income.................... 2,300
Expenses (including HP & secured debts). 1,906
Available for debt repayments........... 394
Monthly UNsecured debt repayments....... 510
Amount short for making debt repayments. -116
Personal Balance Sheet Summary
Total assets (things you own)........... 172,000
Total HP & Secured debt................. -45,600
Total Unsecured debt.................... -21,100
Net Assets.............................. 105,300

Tixy

Hi and welcome

Glad to see you are trying to help, but its going to be difficult if they won't tell you the full information. Does your mother acknowledge they have a problem? is she worried? would she be happier talking to a charity debt advisor about it than to you? or could you persuade her to post here (is she internet savvy?)

In all honesty I'm not sure your brother is the answer here. I'd look for other options first.

How much equity do they have in the house? is there any scope for them to downsize to clear the mortgage?

Are they still using cards and overdrafts?

One way you might be able to help (which is only the smaller items) is to work through all their items such as insurance, gas & elec, telephone etc to see if you can reduce down the cost of their monthly living. The £1100 you have estimated seems quite a high figure (although I appreciate its only an estimate).

Is there anyway your Mother will let you help her and sit down and do a detailed statement of affairs together?
Would she be open to a debt management plan perhaps?

Oh and really awful about mothers employer, you feel certain that she isn't going to see any of this?

Wishing you the greatest luck in helping them.

worrieddaughter_2

Thanks Tixy

I'm going to try and meet with her ASAP - maybe tomorrow, to try to get her to face up to the problem. I remember the way they dealt with losing their house in the 80s (i.e. they buried their heads in the sand)

Yes, they are living off cards and overdrafts, and my mum said at the weekend that she didn't know how they were going to pay next month's mortgage (I suspect that up to now the shortfall has been covered by the £20k remortgage that was taken out last year)

I did a SOA - posted it above - and it looks from this that a better guesstimate of outgoings apart from mortgage and not including unsecured debts, is £900

If anyone can suggest ways to decrease the outgoings in the table above I'd really appreciate it. They did the gas and electricity best provider thing recently, and I'm pretty sure they're in the correct council tax band.

Thanks

RAS

Hi

Can you check whether they have PPI on any cards or accounts, any fees for late payments that they can reclaim. if so, have they claimed on any of these since dad had to stop work?

Find out what the fee charges are for the bank accounts. Get them to open a new BASIC bank account if this stops them being charged fees each month for going OD.

worrieddaughter_2

Thanks RAS, I'll do that - I know that in the past they had PPI, but I'm not sure about that now...

Yes, they have loads of charges that they could apply to sort out! Is it difficult to do this, do you know?

Also, I know that one thing they have never sorted out is that they were mis-sold some life insurance by Lloyds and they didn't chase it up.

I need to get them to realise that bank managers aren't their friends!

Many thanks

A slightly less worried daughter

theoretica

I don't know the situation with the money your mother is owed, but suggest you explore this. Have you had professional advice on this? Often insurances come with legal assistance and if she is a member of a union they can probably help too.

Perhaps remind them that the mortgage is far more important than the cards and overdraft.

worrieddaughter_2

Hi theoretica, thanks for that. But, unfortunately the insurance didn't cover any legal fees. My mum took her boss to the employment tribunal (ACAS) and they awarded her the back pay etc of £28,000, but, as he's now gone bankrupt and there are loads of other people chasing him, my mum's pretty far down on the list, I think, and I know that it's expensive to chase up - it cost her £150 to register that she was owed money (i think that's what it was for anyway).

So, my plan of action should be
1) talk to my mum and get her to tell me everything so I can help
2) get her to open basic bank account
3) make sure they pay the mortgage as a priority
4) look into the ppi and any late payments they can reclaim
5) get her to chase up her former employer and try to get the money off him

... I'm getting the idea that none of you think this is a hopeless situation? I feel better for the advice I've got so far! I was thinking that the only option was for them to sell the house

many many thanks

RAS

They may well need to speak to a debt charity but wait until you know the real situation.

Have you also checked that they are not entitled to any benefits on www.entitledto.com and that if dad is 65 he is gettign the Older person's tax allowance?

zarazara

Talking to Citizens Advise might be a good idea. Is there anyway you could help them out financially,at least with the mortgage? then the money your mum earns could go to debt repayment. Can you get your mum and dad to cut up the credit cards?