Priority Debts Unmanageable

shearersWAG

Hello,

This is my first post, on behalf of a friend. (I saw all of your disbelieving faces, but on this occasion, it's actually true!)

I literally don't know where to start explaining everything, my head is scrambled with all of the stuff she's told me but I'll do my best to get it all down.

Firstly, she has recently been convicted of benefit fraud (claiming as a single person whilst living with a partner). The overpaid HB and CTB are being paid back in monthly instalments outside of court, as agreed with the council. The conviction is in relation to overpayments of Income Support.

She is working part-time, and living with a partner who works full-time.

The second point I'm cringing over whilst writing this is here - she's just told me during a very stressful conversation that (despite the conviction) she is STILL claiming tax credits as a single person. I would have thought that was picked up by the systems by now, but apparently not. I have told her, in no uncertain terms, that she can't do this and needs to get straight on the phone to tax credits and tell them the truth, but what does she say? The conviction covers from 2009, so if she tells tax credits she's been living with a partner all that time, the overpayment is going to be massive and she's already struggling with everything. Please don't shout at me, I don't condone for one second what she's done (and continues to do) but I have been in a tough financial situation myself and I do sympathise with her that things have got this bad. I will admit that a lot of her financial problems are due to living outside her means for a long time, but she honestly feels trapped.

I hope I'm not upsetting all the tax payers out there - I'll point out AGAIN that I don't condone benefit fraud, but I can't just turn my nose up at a friend who is in such trouble.

Second, she's been relying heavily on (deep breath) wonga for 'short term' loans that she's constantly having to extend - because that's the nature of the beast, isn't it? She currently owes them £900 ('valued' customer!!) which is due 4th April, but she's just cancelled the debit card that they're due to take the repayment from. I've advised her to contact wonga to arrange a repayment plan, but I think she's so far gone with regards to her finances that £900 to wonga isn't really registering as a big problem.

The biggest problem is the priority debts that have come up since the benefit fraud investigation and conviction. She has repayment plans in place for:-

£100 housing benefit
£100 council tax (although the council are instructing bailiffs as they have a scheme in place that means they want all overpayments paid back within 6 months, so they want £550 a month)
£75 income support
£50 tax credits overpayment from 2008/9 (bearing in mind they don't know she's had 3 years claiming as a single person fraudulently)

Her rent is £760 a month (her actual HB allowance is £600 according to HB website I just checked) and because of their earnings they aren't entitled to any help with this. Plus, with overpayments and a fraud conviction, I don't even know if she'd be allowed to claim for help even if they were entitled to it.

I've done a rough breakdown of her incomings and outgoings with her, and to be honest I can't see how she can get back on top. As well as the priority debts, they have outstanding debts on a credit card (in their name), a loan (in her mum's name), a loan (in their name, but defaulting on at present I believe).

The questions I have are:-

How important is the wonga loan?
Is there anyone she can speak to to get help sorting out the debts that she obviously has to pay back (government, council etc)?
What on earth does she say to tax credits?

Sorry that I've rambled on so long. I'm usually good with advice (and before you say it, no I didn't know she was claiming as a single person, or I'd have advised her strongly against it) but I am at a loss here.

And she is doing community service if that cheers any of you up a bit

rising_from_the_ashes

shearersWAG wrote: »

And she is doing community service if that cheers any of you up a bit

Not really no :mad:......

I realise you're doing the good friend bit but if she's still claiming when she's already been caught once then she really is being very stupid as she will be being "kept an eye on". Councils are much more on the ball with this now as it's in their interests to catch people with the squeeze on public funding.

How much does she owe in total?

Really the only thing she can do is to go back to them (not sure if this could be the Council but I suspect if it's a court agreed repayment she may need to go back to court) and ask if the payments can be reduced.

wannabee_in_credit

What a mess...
Does she actually want to sort this out? Or is it just because things are starting to get a bit stressy? Just because if she doesn't want to get stuff sorted then it's most unlikely that she will learn to budget and live within her means.
I can personally recommend cccs for advice, but there's also payplan, national debtline and citizens advice. I'm sure there will be expert help and advice available.
I will try not to pass comment or judgement, but if there's a full time wage, part time wage and benefits as well then they must be seriously living beyond their means, and this will need to be addressed before she can deal with the situation.
The moral part of me says she needs to come clean re her benefits - she knows she's not entitled. That's all...

angelaf_3

Also if she really does want to sort this out then she could also speak to Christians Against Poverty about the situation if she has a centre in her area.

BlushingRose

I think we need a SOA...
Does her partner know about all this?

shearersWAG

Her partner has been dripfed the information as it's come to light. Basically, he knew nothing about any of it until the police turned up and arrested her, and since then she's been telling him as stuff has come up. She only told him about the tax credits thing tonight.
What/who are Christians Against Poverty please?
To be honest with you, I think she's been burying her head in the sand a lot regarding the debt/benefit fraud thing. And she's not really cut back much on her spending as far as I can tell, I think she's been hoping it will all just go away but then with the wonga thing and me being so angry and concerned about the tax credits thing it might have finally hit home.
In total, I think it's about £23,000 (I cringed as I typed that), and that obviously doesn't include the tax credits because she hasn't told them yet, so if there are 3 years of overpayment I would guess that'll go up by at least £6,000.
She only started working last year (part time), so she was claiming Income Support but had a partner living there. The only benefit she's now receiving is tax credits (fraudulently as a single person).
What is an SOA please?
Thank you for your advice, to be honest if I was someone else reading this post I wouldn't have the slightest bit of sympathy - I'd probably rant, so I appreciate your responses.

wannabee_in_credit

There's a sticky thread at the top of the forum, where you link to a statement of affairs (SOA) - it's basically a budget - people would advise where cutbacks and savings could be made.
I think she's going to be in a lot of trouble and needs some professional advice - I assume she'll have access to a solicitor... Financially speaking though, I still recommend CCCS (they have an online debt remedy tool that you plug the financial info into and they recommend the best course of action for your finances). Christians Against Poverty are another group, similar to CCCS, who I'd forgotten to mention.

By the way, I forgot to mention before - a cancelled debit card won't stop Wonga taking their money as far as I'm aware. I think they're well known for helping themselves to people's bank accounts.

And I'm being doubly nice - I'm a Mackem

shearersWAG

Thank you - I'll fill it out and post it. I'm fairly sure there are drastic cutbacks to be made, I just don't know where (I went bankrupt myself, I've got no idea why anybody asks me for help!). I've recommended the CCCS to her - would they take into account all of these benefit repayments as well?
I've told her about the Wonga thing - what's the best course of action for her to take?
I've advised her to do 3 things - 1) Phone tax credits 2) phone CCCS and 3) phone her bank to stop the Wonga payment, then phone her bank to cancel any payments being taken. Is that her best course of action?
And thank you very much indeed - I'm not going to take the bait, you're far too friendly to truly be a Mackem

shearersWAG

I just repeated myself! I meant phone her bank to stop the payments THEN phone Wonga to discuss repayments.
No, I haven't been drinking, I'm actually just that stupid.

rising_from_the_ashes

shearersWAG wrote: »

In total, I think it's about £23,000 (I cringed as I typed that), and that obviously doesn't include the tax credits because she hasn't told them yet, so if there are 3 years of overpayment I would guess that'll go up by at least £6,000.

Sorry but she really needs to wake up and sort this out ..... she's been incredibly lucky that she hasn't ended up in jail already- around here the "threshold" for when custodial sentences are given is £4k .... so if she's caught again, then I'm afraid that will be the likely outcome (esp with a previous conviction).

If she's not curbed her spending at all then it doesn't really appear that she's "seen the light" and actually wants to sort this out (sorry).

She needs to take responsibility for this and go and seek advice from one of the debt agencies or the CAB etc.

generaloneill

new member, I smell a troll.