Debt and no work, advice on which way to turn?

thecaretaker

Hello there, I'm new around here although I've been lurking for years. I've sorted myself out through the info on here and am on the (long) road to recovery. I'm here to ask some advice on behalf of someone else that needs help.

A friend has turned to me for advice and I'm not really sure what to do. Here's the problem. They've got about £5000 on two credit cards and £2000 on store cards. They're also got an £8000 mortgage (it's only a small house and mainly paid for through some inheritence). The problem is they've just been made redundant from their job and have absolutely no income at all at present. And at 63, with a slow job market, another job might take a while to find.

Normally I'd suggest either phoning around the debitors and working out a payment plan like I've done for myself, or even getting a DMP, but how can someone do this if they've got no money to offer at teh moment? The only thing I can think of is to release some equity from the house - is this a sensible option?

We've arranged a meeting with the CAB to hope they can shed some light on it, but any ideas would be helpful.

Regards,

CH27

Why have they got no income?

nomoreboomandbust

CH27 wrote: »

Why have they got no income?

Presumably not earned income, but they must be getting pension credit at least

Hannah_10

In priority order:

1. Get an income. They should be entitled to at least state benefit. You can check this easily at http://www.turn2us.org.uk/benefits_search.aspx

2. Phone JobCentre Plus/ the DWP/whoever is indicated and apply for any benefit suggested above.

3. Phone the council, ask to speak to the department who issue payments to cover all or part of the mortgage for people on benefits. I forget the name of it, but a such scheme does exist. Your council will know who to transfer you to.

3. Write to the unsecured creditors to explain your situation has changed, you are now on benefits, and offer them token payments of £2 a month until your circumstances change. (*see footnote)

4. Post his SOA here and we will [STRIKE]savage it[/STRIKE] make helpful suggestions on how he could be better off.

Alternatively- if he is not found to be eligable for any benefits then it will probably be because he has savings, investments or assets (not counting the house and a sensible car) that are too valuable. In which case he needs to use them to pay his debts and then use any remainder to live on until he reaches the eligable levels. He must remember that if he burns through these stupidly fast he will be refused benefit when he is broke so he needs to live at or close to what the benefits agency would allocate him if he did not have assets (find this out by running the calculator in point 1 without including the assets).


* = The creditors wont like it, they wont accept it, they'll mark a default on his credit file and pass it to a DCA but he should ignore all that and keep sending £2 a month anyway, by check, postal order only and always using signed for post. The creditor (be that the lender or the DCA) will threaten to take him to court and all that jazz, just ignore it. They wont take him to court because if he is on state benefits and unemployed then that's really easy to document that £2 a month IS all he can afford. Also he is making the payments, even if they are saying £2 isn't good enough, he is still sending it so he is making the payments. So for those 2 reasons the judge would side with your mate and the creditor would end up with costs- which is why they wont. They rely on you not knowing that so they can frighten you into paying them. It's exactly the same as when a thug knows he can't win a scrap he sets out to win the pre-fight banter so well that the pub brawl never happens. Or when we put a load of carboard tanks in the desert in Kuwait to make Saddam Hussein think we'd brought more might than we had.