Huge debts - urgently need help

wee_V_2

Well after the debt disaster with my boyfriend (see wee_V - Trust deed equity mess), we've just found out his sister is in an even worse situation...

She's in hospital just now with extreme pain, due to an ongoing illness - she had a rare and very serious form of cancer 10 years ago when she was 21. My b/f went to collect some clothes to take to hospital and found 2 carrier bags full of unopened letters. Oh dear.....

I went through everything and she owes approx £50,000:

£888 mortgage arrears
£920 gas & electricity
£13,000 student loans
£700 ish loan arrears (2 loans, 1 is a car loan)
That leaves the rest £34,500 ish on credit cards.

She only has about £588 a month in benefits coming in and and her monthly outgoings (not counting any payments to credit cards or debts) is about £1600. She was working until about 6 months ago, lost her job due to her illness and everything has snowballed. There's so many bank charges getting added every week and she's had debt collectors coming round and phoning. She's ignored everything.

We had a meeting with council debt advisor today. The one and only option seems to be she will have to sell her house, as the equity will probably cover all debts. We thought this might be the case, but the problem is, because of her illness and the pain she's in at present and an operation looming tomorrow, her state of mind cannot cope with this. We can't bring ourselves to tell her or her parents (they too are very stressed at the moment).

I know it will all HAVE to come out soon, but I'm hoping we can freeze further payments/charges for a few months, until such time she is out of hospital and in a better frame of mind to cope with losing her house. Has anyone been in a similar situation? I'm going to write letters to all creditors (we have signed consent from her to deal with her debt on her behalf) and I'm just looking for a bit of advice on what to say and what can we hope for - 3, 6 months freezing all further payments? We just want a bit of breathing space. If we tell her now, it could tip her over the edge - same goes for her parents.

HELP!! This is way over my head.
:eek:

lonely_2

Hi there, it sounds like a terrible situation to be in, but well done for trying to sort it out for her. Can you speak to CAB or the Nationaldebtline? They will have lots of advice I expect. Can I just ask - if you have her signed consent to deal with her debt, why haven't you been able to tell her she might have to sell her house?

Storm

As you've got signed consent I would go to CCCS for advise as they'll often write to creditors on your behalf. Check through the paperwork to see if she's got PPI on any of the credit cards, loans, mortgage etc and then see if they'll pay out now.

With the charges, these can be claimed back so have a look at Martin's guide on the homepage and get the statements from the last 6 years from all the creditors.

It sounds like you've got a huge amount falling on your shoulders at the moment, and whilst you want to help, please remember that you've got to look after yourself first. I can understand not wanting to tell her at the moment about the possibility of losing the house, but perhaps telling her parents could be an option (I know you don't want to). They may be able to help out financially or emotionally with this situation, or at least offer her a place to stay if the house does end up being sold.

wee_V_2

We tried to tell her last week she may lose her house, but she's so doped up on strong pain relief drugs that she's not taking anything in.

No-one would speak to my b/f without a letter of consent, so he got her to sign letters. She signed them so he could start dealing with the debts, but to be honest, I think she thinks a magic fairy will come along and sort it all out for her.

Don't worry, she WILL be told soon about the house, but she has an operation tomorrow, which her future health depends on, so her mental state it very fragile at this particular time.

wee_V_2

My b/f has been phoning all payment protection people today. All said the same - they will not pay out as it's an existing illness.

I wanted him to tell their mum tonight, but she's very upset and worried about her daughter's operation and state of mind. So he's decided to tell her this weekend, after the operation. We can't hide it much longer.

Does the CCCS deal with making 1 monthly payment, which they spread between creditors? I doubt she could even afford that, as she's living on benefits. Plus is there any point if she has to sell the house anyway, which she will have to before it's repossessed.

wee_V_2

An update on the above.... she got out of hospital a few weeks ago, but is still going back every 2 weeks for pain relief injections. We told her mum and dad about the debt. Her mum does not want her to lose the house as she's suffering from depression and her mum feels her house is all she has left in life to be positive about at present.

SO, rightly or wrongly, her parents are going to pay the debt. This will mean spending their retirement money, so they're hoping to make a deal with the creditors... I showed them the full & final settlement letter on National Debt Helpline's website, so they've written to all creditors with an offer of about 20% of the debt. Most of them haven't replied, RBS says they will not accept less than 90%.

Does anyone have any advice about how to get a good settlement figure out of the banks/CCCs? What percentage can they expect to pay?

angelavdavis

Bounce! Can someone help this poster out please? Thanks

Shineyhappy

Hi,

I am very sorry to here of her situation.

All I can think of is for her to send copies of any doctors notes or anything that shows her condition to the creditors, to try and explain the situation and hope some of them are sympathetic.

Does she have any insurance against this sort of illness?

Is her mortgage interest only? If not would the bank let her swop to interest only until she is back on her feet? I had to change mine to IO when I bought my ex out and the bank was fine about that. If her home is large enough, would she object to a lodger?

Have you made sure she is getting all the benefits possible? I know there are some charities that will help out cancer sufferers financially although I dont know an names.

I think a lot of people on here talk about https://www.entitledto.co.uk or something similar to check about benefits, if not your local CAB should know if she could get some help. Does she have a carer as I think they might be entitled to some sort of allowance. Sorry I cant be of more help.

Best of luck and I hope she recovers quickly.

wee_V_2

Her mum has been speaking to someone about benefits, plus the council apparently pay the interest on the mortgage after you've been unemployed 39 weeks, which should be sometime soon. This takes a wee bit of the burden off her mum (who is having to pay the mortgage just now) in the short term. But in the long term there's still over £50k debt to pay, so we need to get full & final settlements as low as pos, so her parents can afford to pay it.

Most of the banks are not sympathetic at all. When we found out about the debt, my b/f wrote to them all explaining she was in hospital and asked them to freeze the charges & interest, as we were seeking professional advice on what to do. Most of them ignored that and those that did reply said no they wouldn't.

Ytaya

I think if you persist with the banks, they will eventually come around. After all, if it goes to court they'd only get awarded a similar amount, looking at your SIL's income. You could pass it over to someone like CCCS to deal with on your behalf? That way, you can just tell the banks to write to CCCS when they call. Sometimes, the debt management people have a bit more negotiating power.

chevalier

Okay the first thing is to divide the debts
Priority debts are mortgage, gas/electricity/water, council tax. These should be paid out of any money if at all possible. So
1) Is your SIL getting council tax benefit? If not then you can put in a claim and ask for it to be backdated explaining that the illness meant it couldn't be put in before
2) Put in for Disability Living Allowance, this is a funny benefit, and she might or might not qualify for it. It would be a bit of extra money.
3) I would echo what another poster said about asking the mortgage company to vary the mortgage, especially if the council will be paying the interest soon. Perhaps they could arrange a payment holiday as a breather until the council money starts paying the interest?

Next you have the non priority debts - ie loans and credit cards. I would strongly suggest you contact CCCS or Payplan with regard to these. If she is able to pay a bit to each creditor then either of the FREE, impartial companies can negotiate with her creditors. Very often they will be able to get creditors to freeze interest/stop applying charges, when the creditor won't do this for an individual. However be prepared for calls trying to inveigle extra payments out of you. You just have to refer them all back to which ever debt management company you decide to go with. After a while, they will come round, and the monthly money will then be paying off the debt.

If the worst comes to the worst creditors can ask for a charging order to be put on the house. This means that IF the property is sold, the mortgage company gets their money first, but then the creditor get their money next, with any balance going to your SIL.

She would only lose the house if one of her creditors made her bankrupt. But there are steps to go through before that happens. Ie the above.

Is there any likelihood that she will work again in the future? if this truely is the case then you could also point this out to her creditors, so that they know that circumstances could change for the better in the future. It may make them more amenable to accepting a debt management plan run by CCCS or Payplan.

As regards the charges, I would suggest that she opens a basic bank account to get her benefits paid into, and any remaining direct debits paid out of, and then that you on her behalf starts claiming them back. Getting the charges back would, I am sure, make a big dent in her debts. You can claim back the last 6 years worth.

Finally you mentioned that she lost her last job due to the illness. You may wish to check if they are allowed to do this under the Disability Discrimination legistlation. The employer has to make every attempt to facilitate her return to work, including varying hours etc. So may be she was unfairly dismissed?

best of luck with all of this
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