Me mums in a pickle :o(

Powderboy80

Hi everyone,

I'm a massive fan of this website been using it for tips for years, top marks to you MSE!!!

I have a large dilemma on my hands so bare with me while I try and explain this monster.

I'm trying to figure out a way to help my mum. She is retired, some health issues, has a decent widows (father passed away in 1993) and state pension but these are eaten up every month by her mountain of debt.

When I say mountain we are talking Everest. She has the following debts that I know of....

Mortgage
2nd mortgage secured on the house, as far as I know if she misses payment they can take the house
About 20 - 30k credit card debt
A loan shark charging 40% on that load
Maxed out overdraft
Several loans over 5k
Catalogs
Usual monthly outgoings I.e utilities
And a slight gambling problem....

She is the type of person who isn't money savy and people take advantage of when we (the family) aren't around, she's too kind and generous for her own good.

She has been getting red letters for the last few months and seems to be losing all hope and it's really affecting the family as a whole as we are all constantly giving her 500 here 1000 there but due to all these high interest outgoings it's just swallowed up.

She's in the red every month and struggles to buy food for the week.

This has been compounding for years and we are past breaking point.

So.....

The initial plan was to sell the house, pay off all her debts, have some change to put away and save and in turn free up her pensions so she could start living some kind of life in rented accommodation somewhere.

The problem is the house isn't selling. We have had over 30 viewings over 16 months and not a sniff, so every month that passes the worse this problem becomes.

Also she has been a resident there for 25 years, it's the family home where we all grew up and she really doesn't want to sell it, its where she bought with dad, to many good memories to just sell up.

All this is so frustrating for me, it's heartbreaking to see what real debt problems do to a person over years, I'm really tired of it and she deserves a better existence after bring up 4 children on her own.

So I came up with an idea and this is where I need your advice guys...

If I bought the house so took out a mortgage in my name for the amount of her debts, lets say 155k. Pay off the debts and still have 30k equity in the property as it is worth about 170k.

This then frees up here pension which is about 2k a month, she pays me I pay the mortgage - job done?

Everything is consolidated, I / we the family take control, she's debt free, keeps the house she loves....

Her pensions keep coming through so she can always pay the mortgage, no more credit cards, no more sharks, no more gambling....hope!!

This seems to simple though, am I missing a trick here? Your thoughts and comments will be much appreciated guys.

The only problem i can see is getting the deposit for the mortgage, I have 7k savings that I would happily sacrifice.

Apologies for the lengthy post.

cc4rhu

But that doesn't stop your mum getting into the same problems as she won't have learnt to deal with it

Here's my advice:

Pay the secured debts and utilities. Priority.
Get the loan shark paid off - if you can loan her the money then great
Open a new bank account to get the pension paid into
Everything else send a £1 payment to as a token payment and explain that she's contacting a DMP for advice
Then either contact Stepchange or similar charity to set up a non-fee paying DMP which tackles all of the CC, o/d debts etc. She can put you down as a creditor too.
She'll get defaults, possible CCJs but she keep her house and frees up her pension.

triple_choc_chip

Hi Powderboy80

I'm sure others will be along with more specific advice but I just wanted to say that you are forgetting the legalities.

If you take out a mortgage and buy the house, it will be your house and your mum would be your tenant and need to pay rent to you with which you can make your mortgage payments. Given her problems and the fact that this solution does not address her problems (i.e. the gambling etc) you need to ensure you can pay the mortgage if she doesn't pay you the rent.

You also need to consider the future and whether you will be able to get another mortgage for your own home when you wish to.

You also need to try and ensure she uses the proceeds (from selling her house to you) on the debts - but the money will be in her account and you cannot force her to do that.

It's admirable that you want to help but make sure you consider all possible scenarios because when members of your family don't act as you have assumed they would it's even more complicated and hurtful than it ever is with strangers.

Powderboy80

Hey CC4RHU and Triple Choc Chip.....

Many thanks first for your swift replies.

CC4RHU - You’re completely right in what you’re saying. It is a worry thatthese problems (gambling, money management) will continue despite the effortsto clear the debt and her mentality. I think the DMP charity is a great optionand maybe some additional help in those other areas that may persist. They arethe experts and after some research / reviews I'll choose a suitable company toproceed with.

TCC - Also take your point regarding legality and how it will affect me inthe long run, I'm not even sure if I would be able to get the mortgage for theamount as it stands and the deposit would probably be too much also, i wouldn’ttake out any additional lending to cover the cost of that either as I now themortgage would be rejected anyway.

I’ll obviously want to get my own place at some time and I don’t think themissis would appreciate me jeopardising that with this mess.

So I think its experts / advice andwe'll go from there, the journey begins.

Trajal

I suggest a long heart-to-heart with all family members concerned and then stage a financial intervention.

For this to work, her spending is going to need to be restricted and that can only happen if she is either physically prevented from spending money (highly unlikely she would agree to that) or if she starts to realise she has a problem and works on the gambling/spending issues herself.

It's no use just nagging her, that will never work, she is going to need to WANT to do it herself.

If she had come here and posted directly then it would be different, but you posting demonstrates that you are very well intentioned but unfortunately not the person in question.

Imagine this scenario... paying off all her debts, catching her up on her mortgage and then 18 months down the line finding out she has done it again. What would you do then?

That's the problem you have here - without any control over the causation (i.e. her habits) you cannot really apply any long term fix. Everything you do will be a minor salve or bandage over a gaping wound. Might stem the blood flow in the first instance for a short while but it will soon get out of control again.

Talk to her and convince her, without nagging, that she needs help and then support her through that. Whatever you do, I strongly suggest not taking on this excess burden yourself, no matter how tempted you are, because you have no guarantee you will not need to end up doing so again in a couple of years.

Good luck.

P.s. Try getting her addicted to this forum - it may act as a displacement. I love spending but deliberately got myself involved on this forum and it works to switch that love around to loving saving money. I now collect money instead of things. Much better!