Pay Day Loan companies linked to parents address

rhindley

Hi,
I am a newbie at all of this, but having found out yesterday that my 20 year old step-daughter has taken out pay day loans with seven different companies, and has an overdraft with Lloyds, I was shocked in to contacting you. Her total debt appears to be circa £6,000!!

I would like to know whether the fact that the pay day loan companies would have been given our home address as the registered place where our step-daughter lives, will, in any way, risk our own credit rating in the future, or indeed bear the risk of the Bailiffs coming round to our house should she badly default on any payments due.
We (My Wife and I) have never taken out a payday loan ourselves and never intend to.

We are in the process of trying to help my step-daughter find a solution with a debt management plan. She is currently thinking of consolidating all her debtors by using a company call Pay Plan. We are not so sure this is a good idea.

Any replies on both these queries would be very much appreciated, but no worries if not.

Kind regards,
Richard.

Chrisblue1962

Hi, credit ratings are linked to individuals not residential addresses so the fact that your step-daughter has stated your address to Pay Day Loan companies should not worry you.

You need to sit down with your step-daughter and do a Statement of Affairs - i.e. list a total of all debts versus her income and see if you can meet repayments . If she cannot, she may need to formulate a repayment plan via Pay Plan or StepChange, for example.

Most importantly, and possibly the hardest part, is your step-daughter needs to do a bit of growing up and change her attitude to money and debt. Harsh but true...

redpete

The debts won't affect your credit rating - they are for people not houses.

You might get debt collectors coming to your house - after all that's where they've been told your step-daughter lives - however you don't have to let them in and you can tell them that she doesn't live there. (I would pass on her actual address so that she can't avoid the pain.)

Pay Plan are often recommended here for helping with a repayment plan.

nicp60

Hi Richard,
Payplan are a free debt advisory service - they do not offer loans to consolidate debt. Rather what would happen is that they would work out with your step-daughter what she could afford to repay each month, and then contact your step-daughter's creditors and arrange with them to freeze the interest and offer them a reduced payment.

Debt management plans are generally very effective. She could also arrange this herself but she should avoid all companies offering this service for a charge.

The main advantages of a DMP are that the interest on the debts is normally frozen (it's at the discretion of the lender if they do this), and your step-daughter will be debt free eventually.
The disadvantages are that her credit report is likely to be trashed, as she will be defaulting on most (if not all) of her credit agreements. This will make it very difficult for her to obtain credit (sometimes even things like mobile contracts) for at least the next 6 years.

The most important thing that your step-daughter must do is to address the reasons why she took out pay day loans in the first place. If she can't budget now, then she will have to learn pretty quickly for a debt management plan to actually work, otherwise she'll find herself in a worse situation.

In your situation, I would sit down with her and work out a monthly budget - she will definitely have to make sacrifices in her spending, but she should be able to find areas to cut back on.

Hope this helps, Nic

ValHaller

rhindley wrote: »

.... We are in the process of trying to help my step-daughter find a solution with a debt management plan. She is currently thinking of consolidating all her debtors by using a company call Pay Plan. We are not so sure this is a good idea.

Please draw a sharp distinction between what Payplan are offering - which is a Debt Management Plan - and consolidation of debts, which is paying off the debts with another loan. Consolidation rarely works - mainly because it is substituting debt with debt.

When it comes to Debt Management Plans, use one without a fee as already advised.

sugarplum10

Payplan are one of the best free services that she can use, I also know of people using Christians against Poverty, Stepchange and you might see on here people talking about CCCS (the old name for stepchange). They are all free debt Management Plan services but alternatively she could go to the local CAB for the same service.

Mort

rhindley wrote: »

We are in the process of trying to help my step-daughter find a solution with a debt management plan. She is currently thinking of consolidating all her debtors by using a company call Pay Plan. We are not so sure this is a good idea.

I can recommend Payplan, it was through a Debt Management Plan with them that our debts and finances were sorted out.
We used consolidation loans in the past and for us they did not work, hence the DMP.
When we were with Payplan they did not do consolidation loans, they were very much against taking on any new debt.

Well done for helping your step daughter and good luck.

rhindley

Dear Everyone,

Thank you all so very much for the swift and comprehensive replies.

We are indeed in the throws of stating some hard and fast facts about the problems she is having and getting her to budget (income versus expenditure and itemising each set of expenses and noting what she spends far more carefully.

One other query which you may be able to help answer, and that is, if she takes out a DMP with Payplan, will she still be able to obtain any other pay day loans (if she is that silly?) while the DMP is in effect, or will the fact that she has taken out a DMP with Payplan effectively freeze her ability to take any further loans? I know there's a lot of pay day loan companies out there and just don't want her to go down the same slippery path any further than she already has gone.

Many thanks,
Richard.

ValHaller

rhindley wrote: »

Dear Everyone,

Thank you all so very much for the swift and comprehensive replies.

We are indeed in the throws of stating some hard and fast facts about the problems she is having and getting her to budget (income versus expenditure and itemising each set of expenses and noting what she spends far more carefully.

One other query which you may be able to help answer, and that is, if she takes out a DMP with Payplan, will she still be able to obtain any other pay day loans (if she is that silly?) while the DMP is in effect, or will the fact that she has taken out a DMP with Payplan effectively freeze her ability to take any further loans? I know there's a lot of pay day loan companies out there and just don't want her to go down the same slippery path any further than she already has gone.

Many thanks,
Richard.

If she does take out more credit, then she will invalidate the DMP - in the eyes of the plan manager and also in the eyes of the creditors who may cease showing forbearance.

Until she sees it for herself. you may be wasting your breath as (step)parents ....