what are they entitled to - advise please

poe.tuesday

a good friend of mine was made redundant late nov - he has a wife and two school age children
she works in a school and earns £15,500 per year
they have a mortgage of £200k which is about £1200 per month
a secured load which is about £400 per month
other credit card debts

she brings home about £1000 per month
he is on jsa of £71 a week
they get child benefit for the two children - £130 per month

they are not entitled to any help from the working or child tax credit as he earned too much from april 11 to april 12

I have tried to help them by getting the mortgage payment date changed and also got them on a reduced rate (that has bought them down to £1200 now)

the savings and redundancy pay that they had has now nearly all gone on and they reckon it will be all gone by the end of March and that they wont be able to pay their mortgage or secure loan

They have put their home on the market as they have about £40k worth of equity and are of the mindset that its better to sell than not pay the mortgage and have their home repossessed etc

can anyone tell me of any benifits that they maybe entitled to and any other help that they could get, it seems crazy to them and me that they can loose it all within a few months because he doesnt have a job, surely there must be help out there or is it just a matter of loose it all and the council will have to re-house them and pay their rent etc

they are also putting in a claim for council tax help and see if they are entitled to any help with their mortgage after 13 weeks of him being on jsa

the £1000 that she brings home just about covers their bills (council tax, insurances, oil, electric etc) and his jsa pays for the food - I have been through their finances with them and they are not money wasters, all the bills that go out are the basics you need to live, the mobile phones have gone etc, they have to run a car as the children go to school several miles away and there is no transport (they live in a rural area)

thanks

HappyMJ

They won't get help with the mortgage. They would need to be on income based JSA and as she earns too much then they won't get it.

Stop paying the debts and negotiate reduced payments until he gets a job and then they will have enough money to live off.

The mortgage company will take quite a long time to repossess and the house should sell before that happens if it has been priced realistically.

BigAunty

They don't just need benefits advice but debt management advice - get them to look over the DM info on the Direct Gov website and post a SOA on the Debt free wanabee board on this forum.

They need a strategy to reduce the debt repayment or get it written off. They should do this now, not when they've run out of money. It is unfeasible for them to service their secured and credit card loans when they can barely cover their basic bills and risk repossession.

They have approx £1400 per month income yet their mortgage and debt payments exceed this before they've even paid a single bill.

To help them with further budgeting, and slashing their living expenses even more, get them to download the MSE budget planner and work through the site to identify the cheapest tariffs, frugal recipes, cheap shopping and so on. There is an Up Your Income Board and Old Style Moneysaving forum, too.

The Shelter website has good info for struggling home owners, how to avoid repossession and arrears, various govt schemes.

I believe there is a way to get tax credits to take into account a current drop in income rather than just last years higher income. Hopefully another poster will explain how this works.

But at the end of the day, it looks like even if they get on top of their debts, they simply have a mortgage that will swallow up the bulk of their disposable income. Even if the guy could get a full time NMW job which would net £200 a week, it still may not make their lifestyle sustainable as a £1200 mortgage would still absorb more than half of their disposable income. A future interest rate change would be catastrophic and the only way that they will go is up.

Is this a repayment or interest only mortgage?

Dunroamin

poe.tuesday wrote: »

the £1000 that she brings home just about covers their bills (council tax, insurances, oil, electric etc) and his jsa pays for the food - I have been through their finances with them and they are not money wasters, all the bills that go out are the basics you need to live, the mobile phones have gone etc, they have to run a car as the children go to school several miles away and there is no transport (they live in a rural area)

That's an awful lot of money just to cover the things that you mention; is anything else included in that?

BigAunty

poe.tuesday wrote: »

... is it just a matter of loose it all and the council will have to re-house them and pay their rent etc

If the sale of their house leaves them with savings above 6k, then it will reduce their entitlement to means tested benefits while 16k will rule them out (housing benefit/council tax benefit).

Councils in England are now only required to offer settled housing, not social housing (many people still think councils have to give a council house to those who qualify as homeless but that's not now the case in England, the councils can offer a private tenancy instead. They can still allocate social housing though but now don't have to).

Her income will be taken into account when it comes to housing benefit, too. You can identify their Local Housing Allowance rate for private sector housing (if they are entitled to a 2 or 3 bedroom property depending on the childrens age/sex) on the Direct Gov or local council website. That is the maximum LHA they could get. Then model this on the Turn2us online benefit calculator which will take into account their income.

Horseunderwater

poe.tuesday wrote: »

a good friend of mine was made redundant late nov - he has a wife and two school age children
she works in a school and earns £15,500 per year
they have a mortgage of £200k which is about £1200 per month
a secured load which is about £400 per month
other credit card debts

she brings home about £1000 per month
he is on jsa of £71 a week
they get child benefit for the two children - £130 per month

they are not entitled to any help from the working or child tax credit as he earned too much from april 11 to april 12

I have tried to help them by getting the mortgage payment date changed and also got them on a reduced rate (that has bought them down to £1200 now)

the savings and redundancy pay that they had has now nearly all gone on and they reckon it will be all gone by the end of March and that they wont be able to pay their mortgage or secure loan

They have put their home on the market as they have about £40k worth of equity and are of the mindset that its better to sell than not pay the mortgage and have their home repossessed etc

can anyone tell me of any benifits that they maybe entitled to and any other help that they could get, it seems crazy to them and me that they can loose it all within a few months because he doesnt have a job, surely there must be help out there or is it just a matter of loose it all and the council will have to re-house them and pay their rent etc

they are also putting in a claim for council tax help and see if they are entitled to any help with their mortgage after 13 weeks of him being on jsa

the £1000 that she brings home just about covers their bills (council tax, insurances, oil, electric etc) and his jsa pays for the food - I have been through their finances with them and they are not money wasters, all the bills that go out are the basics you need to live, the mobile phones have gone etc, they have to run a car as the children go to school several miles away and there is no transport (they live in a rural area)

thanks

This is what you do:
1. stop paying any unsecured debts like credit cards or store cards or catalogue debts - you can get away with paying token £1/month and ask for all of these debts to be interest frozen - they need to write a statement of income/out goings showing what all essential bills come to and send one to each creditor.
2. The essential bills to be paid are the mortgage, council tax & TV licence, followed by utility bills and they need to speak to each company and advise them that they are having these problems, particularly if they have arrears.
3. Re negotiate all phone tariffs - get rid of expensive mobile contracts, where possible, PAYG much better value especially when you stop using them to surf the net and keep in touch with others needlessly.
4. Sell anything they can using free listing weekends on ebay, they normally have at least one of these each month.
5. Food - learn to cook and not buy convenience foods if they do not do that already. Cooking bigger batches and putting some in a freezer for another day.
6. Cut out non essential insurances that may already be covered on home or car insurance. You'd be surprised at how many people are paying for the same thing twice.
I have been there twice and have come through it both times, so I do know what I am talking about. I did mine with out using an IVA or going bankrupt.

Poppie68

Are they able to apply to there mortgage company or a 'mortgage holiday'?, if i remember correctly it is upto months.

Gentile

They must have been living beyond their means and not saving enough for a rainy day.

He was made redundant, is he not planning to get another job ?

poe.tuesday

thanks for the advice so far

from what I know, their rough outgoings, excluding mortgage, credit card bills and the secured loan are:

council tax 150
oil 140
water 60 (i recall them saying it was about this amount)
car tax and insurance 50
electricity 80
house insurance 90
tv licence 15
life insurance 170 (it was about this amount as he was a smoker)
phone and internet 50
petrol (she does 50 miles a day for the school run and getting to her work) 150 to 200

thats about it from what I recall seeing on their breakdown of their costs

he is on income based jsa and has spoken to the dole today about getting help with their mortgage, he will get a form shortly about it, as for council tax, the dole does not reckon he will get help due to her wages

they have got rid of the phone contracts, pet insurance etc

I do think they were living beyond their means, however, they did have some savings as that is what they have been paying the bills with etc

anymore info about tax credits for them would be good as this maybe a way (if they are entitled to any) of upping their money, I will also advise them about the credit cards, I think they are worried about getting poor credit ratings if they tell anyone but they are going to get poor ratings if they cant pay, so best to deal with it now

as for him working, he is desperate to get another job and is trying everything to get one

thanks again

lazer

I think you can get tax credits to reconsider if there is a consiberable drop in income expected in the current year, to that received in the previous year

RAS

Hi

They really do need to do a proper SOA.

The oil, electric, house insurance and life insurance are MASSIVE.

Basic term life insurance to cover the mortgage for both of them should be less than a quarter of what they are paying. House and contents can be got for £20-30 in most places.