Unemployed and £5,000 in debt

fkidd02

Hi all,

I'm trying to help out my brother as he's in a bit of a financial mess. He's been struggling to keep a job and he is in £5,000 of debt. I have gone through his finances, all debts are now in the final stages of debt recovery companies, threatning legal action and repossession. To make matters worse he has had to move him due to a bad break up with his partner. My parents don't know ANY thing regarding the situation.

I now live in Belfast and I'm visiting him in scotland for a few days to try and help him sort out a few things. What possibly can i do to help??? He's 25 and just needs a break in life to help him get on track. He feels the only way out of this situation is to declare himself bankrupt!

Is there any better way????

fozmcfc

Hi,

Didn't want to read and just move on.

Unfortunately I'm no expert when it comes to this sort of thing.

Firstly don't panic, £5,000 is far from unsomountable, but the quicker things get moving, the quicker he can get on.

The basics, are he will need to some sort of proof of income (a statement of affairs) and then contact the companies and offer a token repayment. The statement of affair will be the proof that he is unable to pay anymore.

There are other government backed scheme/companies who can also help him with them.

Please don't despair, there are a lot of people on these forums, who can offer you details and excellent advice on his best course of action, so do keep checking back for replies.

bottleofred

Hi fkidd02 and welcome to the forum for you and your brother,

The first thing your brother needs to do is post his statement of affairs and then he'll get loads of help/advice.

fkidd02

Thank you guys,

I just wondered what would need to be included in the statement of affairs?

Thanks so much for all your help.

Hannah_10

There's a really neat and simple SOA calculator on the link below, you just fill in the boxes it does the rest. You can even tick a box so it's int he right format for this board too and show us all as he might benefit from further advice from us...

http://www.makesenseofcards.com/soacalc.html

Someone above mentioned "government backed schemes/companies". I have heard that phrase a lot, it's a favourite of the companies who administer debt management plans and IVA's (individual volontary agreements). Take note, anyone but the charities mentioned in the link below are going to charge you through the nose for this. For a DMP they typically take a third of the money he is paying and keep it for themselves and an IVA nets them about £7,500 (from your brother, not from the creditors) so an IVA is totally unsuitable. It's also not available in Scotland, slight hiccup there then! Scotland does have a Protected Trust Deed system instead, but that's not really any more suitable. With a DMP there is nothing a paid company can do for him that he can't do himself, however if he's feeling small and needs more of a hand then CCCS (a charity) will set him up a DMP free of any charges at all. The charities also do general debt advice, have a read of this from that nice man off the telly...

http://www.moneysavingexpert.com/loans/debt-help-plan#help

chuckley

i printed off a budget sheet from national debtline and enclosed it with each letter to my creditors. i also got the sample letter from them too. Theres only 1 thats ignoring my letters. they cant really argue when you are unemployed/reduction in pay. some will try (Mackenzie Hall) but if you can only afford xyz then what can they do?!

Hannah_10

Chuckey is fkidd02 your sister? Or was yours a separate case?

chuckley

sep case, was just detailing what I did. Dunno why ud think we were related

dancingfairy

Hi - you and he need to differentiate between priority debts and non-priority debts - priority debts which need tackling first are rent/mortgage, secured loans, council tax, electric/gas, water - basically the essentials. Non-priority is basically credit cards and unsecured loans.
Priority debts you need to sort first, non-proprity debts are well a non-priority - they can threaten all they like and jump up and down but frankly they come bottom of the pile.
He needs to - open a new bank account if he owes money on credit cards or an overdraft connected with his current account as they can without warning just help themselves to the money they are owed and this is the last thing he would need right now.
Check he is getting all the benefits he is entitled to - housing benefit, council tax benefit, check out the mortgage help that is available, job seekers or ESA/Disability benefit as applicable.
If he has any priority bills owing such as council tax/mortgage he should get in touch with the relevant people to let them know he is struggling and that he is not ignoring the problem and he is seeking advice from the CAB/National Debtline or CCCS.
Basically whilst he is unemployed his priorities are keeping a roof over his head and all the unsecured people will have to wait while he gets help to see whether a dmp/bankruptcy etc is the best option.
df