Payment of debts whilst on benefits.

motherof6

hi there, I am posting this for a friend who has no access to the internet or a laptop.
She is a lone parent on Income support for herself and tax credits for her children. She has debts of approximatley £1600 from credit cards. she no longer uses any of them and hasnt done so for a long time. She has arranged with the cccs to make payments on her behalf which come to just over £200 a month.
This was the amount the cccs said she had left over when taking all her debts etc into account. This is when she is as I said on income support with young children still at home. Her rent is paid by housing benefit.
She had a very good job and was well respected before she was made redundant. Her husband also had a good job but he left her about 3 yrs ago. I am only saying this because the debts are before this whilst she was working and she could afford the repayments easily.
What would happen if she simply said to the cccs , I do not have £200 spare each month. Instead of paying Halifax credit card £110 a month I can only offer them £40. The same with barcleycard instead of £80 I can only offer £20. Surely if it went to court the court wouldnt make her pay what she couldnt afford? When she applied for cccs help they said the only option she had if she could not afford these payments would be to go Bankrupt which with her future plans when the children are a bit older is not an option.
Any advise for her please.

alwaysonthego_2

On non-priority debts she should only be paying £1 token payment per month. She needs to contact CCCS and let them know her circumstances have changed.

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sofababe

If she is in receipt of benefits only then she certainly won't have £200 a month left over! These benefits total the minimum amount you can legally afford to live on. Was she receiving only these benefits when she contacted CCCS? I would write to the CC companies myself explaining that I will only be offering £1 a month each and explaining that I am on benefits only, if she genuinely has no other income.

fermi

Benefits are there to meet basic living expenses.

You should never be expected to pay non-priority debts from them.

CCCS should not be advising any sort of payment plan other than token payments. You need to have a word with them ASAP.

HappyMJ

Yep another one for £1 per month token payments. The Income Support should be just enough for her own living costs and the Child Tax Credits and even any Child Support from the ex-partner should be spent on the children's living costs and not repaying debts.

Tixy

It is unusual that people would have anything like £200 spare when on benefits. Its far more usual that people just pay token payments to each creditor of £1 per month.

However she should have worked out a budget with CCCS to take into account her benefits income and her outgoings. This will be where the figure of £200 has come from. She needs to look through that budget and see whether any costs have been ommitted or to try to see where she is spending more than they have put on the budget.

Then I would suggest she talks to CCCS again to recalculate to a budget she can live within.

podperson

Where have cccs got the amount of £200 a month from? They don't pick figures out of the air, they will have done a budget with her showing her incomings and outgoings and what was left over should be the amount they suggest should be going to the debts. She should also have been sent a copy of this budget and what is going to the debts for her records. Was this budget done when her circumstances were different? Are some of the amounts wrong or have some bills been missed off it? If this is an amount she can't afford (and seems quite high if she is on benefits) then she needs to go back to them and do a new budget which reflects her actual circumstances and shows the correct amount she has left for the debts. I think bankruptcy seems an extreme measure for under £2k of debt (is that the correct amount?)

Sam____2

she may be on income support but maintenence isn't taken into account for IS any more, she could be getting a fair amount from her ex every month and this could be why they say she can afford £200 per month...

motherof6

Sorry it is £16000 she owes not £1600. I was trying to do this quickly with her this afternoon. Just rung her with your replies. She did a budget with the cccs and literally put down minimum amounts for evertyhing. I agreed at the time that she should have no excess income whilst on benefits but she definitly said the cccs and they then suggested with her level of debt the best option was bankruptcy. Her lone parent adviser at the DSS was shocked when she told them she was having to pay this money but could offer no advise. She has never tried to deny the debts and has every intention of eventually paying them off but her life took a totally unexpected turn with her redundency and could basically happen to anybody.
What is the £1 token payment and is this actually acceptable?
Thankyou , this really is appreciated.

MrsTinks

To be fair - it would help a lot if she posted her full SOA on here so we can actually see what might be amiss... otherwise we're guessing If she has a copy of the income/expenditure that you can post here for her we can give a lot more constructive advice

HappyMJ

motherof6 wrote: »

What is the £1 token payment and is this actually acceptable?
Thankyou , this really is appreciated.

It is acceptable. It's an acknowledgment of the debt and acknowledging that an income drop is temporary and normal payments will resume once normal income resumes. It proves to a creditor that you simply aren't ignoring them. You could pay nothing but then they would want to know what's happening.

You can put minimum amounts for everything but it gives you no room to move, no allowance for an emergency. If you put £400 down for groceries which is acceptable for 3 people but in reality aim to spend half of that then it's up to you what you do with the £200 of savings. If you had put £200 down then it becomes difficult to budget for something extra as the creditors will expect the £200 saving as a payment towards debts.