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Payplan + Retirement - please help as I want to help my parents

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  • TLOR
    TLOR Posts: 44 Forumite
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    Hi Everyone,

    Sorry in the delayed response to this, but I have finally got my parents to accept my help and got the information asked for.

    My parents are in a DMP not an IVA. My father has been paying £350 a month for the last 3 years but he has 13 years remaining on a debt of crica £40k! (apparently one creditor is still applying interest so their portion of the debt has barely change).

    My Father turned 67 a couple of days ago and has postponed retiring to pay of this debt, but he can not go on for another 13 years! (he works 12 hour days in harsh conditions).

    He has reduced his days from 5 to 3 per week as he now receives a pension and therefore he has not reduced his monthly payments as he assumed his pension will make up for his reduced work income.

    I am basically looking for some kind of exit plan for my parents as obviously he can't continue as he is, and can he reduce his payments now? Is there anyway to get his interest frozen?

    If they sell there house will PayPlan pursue my fathers assumed portion of any equity (as he has been paying the mortgage for 20 years even though the property is in sole name of my mother)?

    Thanks for any advice on this topic, I am really worried about them and want to help.
  • supersavershal
    supersavershal Posts: 1,270 Forumite
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    There is something not right with this.The original debt was £40000, 16 years of paying £350 that amounts to £67200??
    where has the £27200 extra come from? If the creditors have kept applying interest this seems a bit steep. Maybe your Dad needs to involve the FOS and look at the interest being charged.
  • wba31
    wba31 Posts: 2,189 Forumite
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    Payplan will not chase your parents for anything. They give them free debt advice and aim to give them advice and solutions at all points. I think it's fair to say that a 13 year DMP is not the best option for your parents, but if they are against any insolvency option, then there arent many alternatives left.

    your parents, or you with their authority, need to have a conversation with payplan, or any other free debt advice provider (CAB, National Debtline, Step Change) about a long term plan moving forward, but it may mean some sacrifice for your parents, not necessarily working for the next 12 years, but maybe selling the property and renting? seeing if equity release is a viable option?
  • TLOR
    TLOR Posts: 44 Forumite
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    wba31 wrote: »
    Payplan will not chase your parents for anything. They give them free debt advice and aim to give them advice and solutions at all points. I think it's fair to say that a 13 year DMP is not the best option for your parents, but if they are against any insolvency option, then there arent many alternatives left.

    your parents, or you with their authority, need to have a conversation with payplan, or any other free debt advice provider (CAB, National Debtline, Step Change) about a long term plan moving forward, but it may mean some sacrifice for your parents, not necessarily working for the next 12 years, but maybe selling the property and renting? seeing if equity release is a viable option?

    Thanks for your reply wba, I intend to talk to payplan myself now my father has given me permission, just hoping to get an idea of topics/options for discussion.

    I doubt there is much equity in their property at all, less than 10k. Could the creditors go after any equity if it was sold even though it is solely in my mothers name?

    Also is my fathers pension fair game when planning a budget, if they have no reasonable prospect of ever paying this debt off I'd prefer to reduce the payments to as low as humanly possible so that they can stop worrying about trying to find such a large amount each month.

    I guess the only other option given that my father won't entertain solvency is simply to stop paying which result in CCJ's that remain on his file for 6 years.

    These seem to be his only options as far as I can tell but open to alternative suggestions?

    PS
    Thanks for your advice supersavershal, that's my gut feeling too!
  • wba31
    wba31 Posts: 2,189 Forumite
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    TLOR wrote: »
    Thanks for your reply wba, I intend to talk to payplan myself now my father has given me permission, just hoping to get an idea of topics/options for discussion.

    I doubt there is much equity in their property at all, less than 10k. Could the creditors go after any equity if it was sold even though it is solely in my mothers name? Creditors cannot chase equity for fun, they have to apply for a CCJ, the CCJ needs to be defaulted on, and then they must apply for a charging order.

    Also is my fathers pension fair game when planning a budget, if they have no reasonable prospect of ever paying this debt off I'd prefer to reduce the payments to as low as humanly possible so that they can stop worrying about trying to find such a large amount each month. All income and expenditure should be considered so that any repayment is fair for all involved, creditors as well as your father who borrowed the money

    I guess the only other option given that my father won't entertain solvency is simply to stop paying which result in CCJ's that remain on his file for 6 years. Anything that happens with regards to credit stays on the credit file for 6 years, the debts themselves will remain on until 6 years after the debt is satisfied

    These seem to be his only options as far as I can tell but open to alternative suggestions?

    PS
    Thanks for your advice supersavershal, that's my gut feeling too!

    On the face of it, if they have a small amount of equity and want to retire, they could look at selling the property and using the equity to make settlement offers, but you earlier suggest there could be £20k - £40k equity.
    Are they on repayment or interest only mortgage? if interest only they are pretty much only renting their property anyway...
  • TLOR
    TLOR Posts: 44 Forumite
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    wba31 wrote: »
    On the face of it, if they have a small amount of equity and want to retire, they could look at selling the property and using the equity to make settlement offers, but you earlier suggest there could be £20k - £40k equity.
    Are they on repayment or interest only mortgage? if interest only they are pretty much only renting their property anyway...

    Hi,

    Thanks for the reply, their house is in the North of England and the prices have dropped dramatically.

    I assume as long as they are still paying PayPlan they can sell their property and if their was any equity it would simply go to the name on the deeds, eg my mother? Under a DMP this would be of no concern to PayPlan or my fathers creditors giving the house is not in his name?
  • wba31
    wba31 Posts: 2,189 Forumite
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    TLOR wrote: »
    Hi,

    Thanks for the reply, their house is in the North of England and the prices have dropped dramatically.

    I assume as long as they are still paying PayPlan they can sell their property and if their was any equity it would simply go to the name on the deeds, eg my mother? Under a DMP this would be of no concern to PayPlan or my fathers creditors giving the house is not in his name?

    True, however if your father was to then consider an insolvency option, the Insolvency Service would see that your father has beneficial interest in the property due to him paying the mortgage
  • TLOR
    TLOR Posts: 44 Forumite
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    wba31 wrote: »
    True, however if your father was to then consider an insolvency option, the Insolvency Service would see that your father has beneficial interest in the property due to him paying the mortgage

    Thanks for your reply again and sorry to keep coming back with more questions, I just want to fully understand my fathers position.

    I don't think my father is considering bankruptcy but are you suggesting if my parents sold the property while still under the DMP and then my mother received a(and possibly spent) the funds if my father then decided to go bankrupt they would pursue my mother for funds (that may no longer exist)?

    Thanks again
  • wba31
    wba31 Posts: 2,189 Forumite
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    ok, let's say your parents sold up, got £20k equity out of the property having been on a repayment mortgage, which is all paid to your mother, and your father then went bankrupt, the official receiver in the case would see that the mortgage was repayment, and would investigate payments on this mortgage, and seeing that your father paid it, he would argue that despite the money and the mortgage being in your mothers name only, that your father is entitled to some of the equity having paid the mortgage for a period of time.
    if it is an interest only mortgage, it's slightly different as your father's payments haven't been gaining equity, and your mother would have to have her initial deposit back if it was all her own money, but an OR may argue that your father still has some entitlement due to paying the mortgage payments for 20 years
  • TLOR
    TLOR Posts: 44 Forumite
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    wba31 wrote: »
    ok, let's say your parents sold up, got £20k equity out of the property having been on a repayment mortgage, which is all paid to your mother, and your father then went bankrupt, the official receiver in the case would see that the mortgage was repayment, and would investigate payments on this mortgage, and seeing that your father paid it, he would argue that despite the money and the mortgage being in your mothers name only, that your father is entitled to some of the equity having paid the mortgage for a period of time.
    if it is an interest only mortgage, it's slightly different as your father's payments haven't been gaining equity, and your mother would have to have her initial deposit back if it was all her own money, but an OR may argue that your father still has some entitlement due to paying the mortgage payments for 20 years

    Thanks WBA, that makes sense.

    I did actually call PP today and I am now a named contact so can start sorting this out for them. They confirmed that under a DMP even if my mother sold the house the creditors would have no claim on any equity. I agree that a bankruptcy would be different and you explanation sounds valid, however I don't think my Father would consider this and if he ever did I guess I'd ensure that it was long after any equity was still kicking around!

    Thanks for your help.
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