Helping someone with debt?

spinelli101

My mother is in a considerable amount of debt ~£10000, and I am now in a position to help her with some of this. She has been on medical leave for several months now but is due to start a new full time job in January. Living with her are my two sisters, one of whom is a university student collecting her loan and working, the other is a full time mum on child benefits.

I want to make sure by giving her money I am not going to impact of the benefits my sister receives, or end up with my mum getting taxed loads and making it worthless. The payments would not be regular small amounts, rather, i'd pay off one loan completely, and a couple of months later pay off another one.

Can anyone help me make the best choices here?

Many thanks!

fatbelly

I am not sure why you think by giving your mum money it is going to impact the benefits your sister receives. How would that work? What benefit are you thinking about?

I am also puzzled why you think by giving your mum money it is going to end up with her getting taxed loads. You're not really proposing giving her money anyway, are you? You are suggesting you will make a third party payment to clear debts.

This is not always a good idea. It does not deal with the root cause of the debt, nor make the debtor take responsibility for their predicament (as they would in a debt management plan), so making it more likely that debt will reappear.

It also rides roughshod over potentially cheaper strategies such as a Debt Relief Order, full&final settlement, IVA or bankruptcy, nor consider whether the debts are enforceable.

Your mother should take advice herself from one of the charities in Martin's list.

ValHaller

fatbelly wrote: »

This is not always a good idea. It does not deal with the root cause of the debt, nor make the debtor take responsibility for their predicament (as they would in a debt management plan), so making it more likely that debt will reappear.

It also rides roughshod over potentially cheaper strategies such as a Debt Relief Order, full&final settlement, IVA or bankruptcy, nor consider whether the debts are enforceable.

I agree. Start by analyzing the debt to find the most effective approach. Do a household statement of affairs to make sure that the household budget is sustainable. Don't just throw money at the problem, otherwise you risk that becoming the solution of choice for any financial problem in mother's household.

National_Debtline

Hello there,

Compiling a list of all the debts and creating a financial statement is really excellent advice. There could be alternative options that may be open to her.

Whilst every situation is different we have had over the years a number of callers that have had help from family members who have gone on to take further credit again. Of course I cannot say that your mother's situation will be like that but there may be other practical solutions that we can advise on.

If you do decide to help her, you may wish to investigate the possibility of making full & final settlements. This could help her clear the debt by paying a lesser amount to each creditor. More info on those here:

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Best wishes,

David @ NDL.

Depth_Charge

fatbelly wrote: »

I am not sure why you think by giving your mum money it is going to impact the benefits your sister receives. How would that work? What benefit are you thinking about?

I am also puzzled why you think by giving your mum money it is going to end up with her getting taxed loads. You're not really proposing giving her money anyway, are you? You are suggesting you will make a third party payment to clear debts.

This is not always a good idea. It does not deal with the root cause of the debt, nor make the debtor take responsibility for their predicament (as they would in a debt management plan), so making it more likely that debt will reappear.

It also rides roughshod over potentially cheaper strategies such as a Debt Relief Order, full&final settlement, IVA or bankruptcy, nor consider whether the debts are enforceable.

Your mother should take advice herself from one of the charities in Martin's list.

Hi

I totally agree with this post.

Get proper independent advice on all issues and options based on all circumstances before concentrating on one solution in particular.

DC

nomunnofun

spinelli101 wrote: »

I want to make sure by giving her money I am not going to impact of the benefits my sister receives, or end up with my mum getting taxed loads and making it worthless.
Many thanks!

Many think this. If you give your mother one million pounds she will pay tax on precisely none of it. There is no gift tax in the UK on the recipient. Ever!

spinelli101

Thanks everybody for your input.

@fatbelly, I assumed that all benefits/tax credits took into account the total income of the household, hence why I wondered if gifting money would affect that.

We have actually used this website extensively to make budgets, and look into IVA and bankruptcy, neither of which would solve the problem. She set up a debt management plan through the bank, unfortunately as these things go it will take decades to pay them off unless her income drastically improves.

@nomunnofun thanks! I didn't realise that.

Thanks for the info on providing a full and final settlement, it looks like that is best route to go down.