Consolidate? To do or not to do that is the question?

purple_window_shopper

My daughter has various debts to pay off which she is trying to do. She foolishly took out a loan for her and her boyfriend to get a flat and she got a mobile in her name for him because he couldn't get one. They have now split up and, as well as those debts she has some others. She recently found out that he did not pay his phone bill so she has been landed with a bill of £1000. He keeps saying he will give her some money but never does so we have had to give up on the idea of him taking responsibility.
She has a habit of burying her head in the sand so has incurred fees for missing payments and fees from the bank for refusing payments. She also has £1000 overdraft at the bank from her student days.
When she has paid her monthly debts she has £100 left to get her through the month, that does not include paying anything towards her overdraft which she is ignoring!
She is considering consolidating her debts but I am not sure that this is a good idea. I would love some advice please.
Thanks

Pollycat

purple_window_shopper wrote: »

My daughter has various debts to pay off which she is trying to do. She foolishly took out a loan for her and her boyfriend to get a flat and she got a mobile in her name for him because he couldn't get one. They have now split up and, as well as those debts she has some others. She recently found out that he did not pay his phone bill so she has been landed with a bill of £1000. He keeps saying he will give her some money but never does so we have had to give up on the idea of him taking responsibility.
She has a habit of burying her head in the sand so has incurred fees for missing payments and fees from the bank for refusing payments. She also has £1000 overdraft at the bank from her student days.
When she has paid her monthly debts she has £100 left to get her through the month, that does not include paying anything towards her overdraft which she is ignoring!
She is considering consolidating her debts but I am not sure that this is a good idea. I would love some advice please.
Thanks

It sounds to me like your daughter is not fully on board with sorting out this mess (see highlighted red text).

Unless she is, you might have a hard job on your hands.

Could she even get a loan to consolidate these debts?
Consolidation may be a really bad idea if she's the sort of person who will carry on spending (I appreciate that the debt you mention above is not the result of wild credit card spending sprees).

Does the £100 left over include payment of the £1000 phone bill?
Has she done anything about cancelling the contract for the phone that her ex has?

purple_window_shopper

To be fair, she is finally trying. She did herself a budget recently and called up everybody she owes to arrange payment. The people she is paying the phone bill to have now said they want more. The £100 she has left is after paying everything except her overdraft. I'm not sure about the phone, I think she assumes it has been cancelled but I will get her to check.
I have no idea if she will get a loan to consolidate!
Thanks

Pollycat

purple_window_shopper wrote: »

To be fair, she is finally trying. She did herself a budget recently and called up everybody she owes to arrange payment. The people she is paying the phone bill to have now said they want more. The £100 she has left is after paying everything except her overdraft. I'm not sure about the phone, I think she assumes it has been cancelled but I will get her to check.
I have no idea if she will get a loan to consolidate!
Thanks

That's reassuring, your post did make it sound (at least to me) that it was you who were doing most of the sorting out and she was sort-of hoping it would go away.

It might be a good time for you & her to do a SOA so that members can suggest ways of cutting her expenditure, link here;
http://www.makesenseofcards.com/soacalc.html

There's also lots of good info on the sticky 'Help for first time posters' and a link to 'Debt Problems' with more good advice.

Re the £1000 phone bill - why do they want more?

Definitely make sure she's not paying for the phone anymore.

super_g

If she has payment plans in place then she can take those at her own pace but it would be good to write to the companies and request any amounting interest to be frozen.

It may also help if she can make over payments where ever possible.

I am surprised that the mobile company is adding interest. Mobiles bills are not usually a priority debt. My daughter once had a bill of £780 that went unpaid for 8 months and the company said they would set a debt management service after her but never did...

If she can speak to companies then it would not hurt to go to the bank and discuss the over draft... many banks are trying to be helpful as they know that the country is not in the best financial state at the moment... it would also help to write to the bank with a break down of what she has left each month... some banks are happy to differ interest charges, sometimes write them off all together or even reduce them... the debts will just pile up otherwise and the bank does not have a clue until they are told/one speaks to them...

At least she is making an effort! Slowly but surely eh. Best wishes.

Tixy

Hi
She will almost certainly not get a consolidation loan for this debt or any new credit at all for a while.
Has she got copies of her credit reports to see what 'damage' has been done? it sounds like there will almost certainly be a default for the mobile and probably at least a lot of missed payments for other items.

Are there any other costs she can cut back on to increase the £100 available to pay towards debts? Can she increase her income/get a second job so she can pay more off?

Doing a statement of affairs is the sensible way forward, and if she can demonstrate to her creditors that she is paying all she can afford then that increases the chance that they will agree to freeze interest.

purple_window_shopper

I should have said, she is paying the phone bill to a debt collection agency and they wrote to say she is not paying enough and they want more. I will have a look at your link, thanks a bunch :-)

purple_window_shopper

Hi, the £100 is for bus fares, lunches and food shopping so she can't pay any more. She already works long hours 6 days a week in retail and she isn't paid overtime for extra hours as she is a supervisor. She works Sundays to get some extra pay so doesn't have time left to get another job. She called Santander who she has the loan with as she had missed a couple of payments. They, apparantly, said she could pay the arrears at the end of the loan term and just continue her monthly payments. She then received a letter from a debt collection agency asking for the arrears. She called Santander who said it was fine as they were workinh together and she didn't have to apy any extra. This doesn't ring true to me!
Thanks

BigCraigJohn

purple_window_shopper wrote: »

I should have said, she is paying the phone bill to a debt collection agency and they wrote to say she is not paying enough and they want more. I will have a look at your link, thanks a bunch :-)

This is what they do and they like you to believe that they wrote the bible and rule the world. In reality theyve next to zero power unless theyve been to court and even then they dont have a water from stone wand.

Just continue to pay them an affordable amount, infact if need be pay them less. At the end of the day paying some random 2 bob bit DCA is far less important than eating and active utility bills.

Keep everything in writing and never speak on the phone, just refuse to confirm id.

And consolidation is not really a good idea, debts with a dca are generally cheaper to pay back than loans as its a dead balance but do make sure you get statements and make sure you are paying correct.

purple_window_shopper

Thanks, I do get a bit panicky when I see a letter from a debt collection/recovery agency, especially as they come to my address because she moved back here when they split up. :-{

BigCraigJohn

Trust me the the only thing they can do is bombard you with calls and letters every other day that worded in such a way that they intimidate you into paying.
Honestly I must have a pile 2 foot high from various dca's and I would say 99% of that is absolute trash, most of which I completely ignore as it makes no sense, asking for more money or threatening that they MAY take further action.
Once you stand up to them and make it clear that you will pay back but on your terms they will eventually accept it.