Blocking access to loans

BerkshireCarpenter

Our son, who is 24, lives with us and has made a complete mess of life so far .... drugs, alcohol, convictions ... etc. Unexpected arrival of bailiffs on doorstep alerted us to major debts too. A bit of investigation has uncovered 8 different payday loans and three separate bank accounts with maxed out overdrafts. One demanding immediate repayment of entire amount for breaking terms. Total debt about £6,000.


Now it is all in the daylight we have paid off the overdrafts and loans and are charging him a sensible interest rate and capital payoff to clear the debt in two years. He appears to be very relieved it is all in the open .... BUT .... we are worried that he does not really have any grasp of money, cost of debt, or any willpower to resist so will take on new debts when he wants to do something and hasn't got enough cash in his pocket.


He has explained how easy it is go walk into a bank and open an account and then arrange an overdraft. Even easier to go into a money shop and sign away your soul for £50.


So, my question is: Is there any way of preventing someone getting access to credit / debt?


We really want to arrange things so that any lender will just say 'no way'.


Many thanks for any help

marliepanda

No, sorry. He is an adult and has to learn his own way not to do these things. I don't believe there is any way to shut off yourself from credit, and you certainly cant do it for him.

Surely its good for him to learn without 'blocking' as otherwise once the block is lifted the floodgates would open again?

thewhiteavenger

The danger is that the message he is getting is that if he gets into debt, you will bail him out.

If he does it again, wheel him down to the CAB, and hopefully they will get him a debt relief order that will screw up his credit file for six years.

woodformoretrees

I fear that paying his debts for him is just creating more problems . I completely understand why a parent would do it though.
He has to learn for himself.

thecassman86

I agree with the comments above and fear you may have offered him a "get out of jail free card". As he's not actually going to lose anything (credit rating, possessions, etc) he's not going to feel punished for getting into problems - he'll just see you guys as his ticket out of trouble.

I totally understand why you'd do it though - no parent is going to watch their child fall into financial oblivion when they have the means to help them.

If i were you i'd make sure it hit home hard... I'd make the repayments affordable but massive so that his lifestyle has to change in order to pay back the debt to you. At least that way he'll feel the effects of getting into debt in the first place and, perhaps, when it's all paid off he'll see money differently.

cats2012

I don't know though - the arrival of baliffs suggests his credit rating is already pretty shot, which probably means he'd struggle to get much anyway...

thecassman86

cats2012 wrote: »

I don't know though - the arrival of baliffs suggests his credit rating is already pretty shot, which probably means he'd struggle to get much anyway...

That's a good point.

sacha28

So you have got him out of a financial mess. I take my hat off to you and admire what you have done for your son, I just wish I had parents, like you, that cared enough to help me out of any kind of struggle.
But I think you should draw the line there and make sure he understands that you've helped once, now he must take responsibility for himself.

In answer to your question....yes, there is a way that you can 'block' yourself from obtaining credit. I only know of this after a frantic visit to the CAB once I had my LBM. The advisor told me it is possible to 'blacklist' yourself (your son will have to take the steps to do this himself, given his age) and that it will be almost impossible to gain credit. He said there exceptions to this but, should they decide to give credit, it is an unenforceable debt that they can't chase.

The biggest hurdle will be his attitude towards money. Is there anyway he can join a local credit union? These are amazing places that run financial courses to help people understand money better, as well as providing services to enable you to save a little each month as a buffer.

I know people won't/don't agree with you bailing him out but I have to admit that I would probably do the same, but ONE TIME ONLY. This all stems from the fact that my mother never gave me any support whatsoever, financial or otherwise, and I am determined to make my son feel that he can rely on me when he needs me. I also want to protect him from making the same mistakes I did due to this lack of support. There is nothing wrong with this.

Good luck xx

BerkshireCarpenter

Many thanks to all who replied and especially Sacha28.


We will explore the credit union education line since the underlying problems are that he has no real concept of money and no self control (unlike his sister who has both with lots to spare).


Several repliers have suggested that I have 'let him off the hook' but I think we have not. The terms we have set are pretty strict. We are taking approx. 70% of his net income and charging him 12% interest. It should repay the debt over 15 months. We are keen that he can still have some 'life' since it may reduce the feeling that he has nothing to lose and do something stupid to get spending money.


We have removed all bank cards apart from one and removed other forms of ID (driving license, passport) that might be used to take a loan.


I do have concerns about the one remaining bank card and have considered moving him over to a 'cash economy' in which we remove even that and hand back part of his income as cash. In my mind that is a 'last step' that we'd rather not take because we'd rather he learned control for himself.


Underneath it all is his complete lack of self-control that verges on medical condition and the easy availability of debt by just walking into (or logging into) any bank or money shop and asking for it. We can try to influence the former but I'd really like to close off the latter.


Thanks again to everyone who responded.

thecassman86

BerkshireCarpenter wrote: »

Several repliers have suggested that I have 'let him off the hook' but I think we have not. The terms we have set are pretty strict. We are taking approx. 70% of his net income and charging him 12% interest. It should repay the debt over 15 months. We are keen that he can still have some 'life' since it may reduce the feeling that he has nothing to lose and do something stupid to get spending money.


We have removed all bank cards apart from one and removed other forms of ID (driving license, passport) that might be used to take a loan.

I think that's a really sensible way of handling it. As i said in my original reply, no parent is going to let their child get into a mess without stepping in, but setting down strict ground rules like you have will make him realize the implications of financial frivolity.

The key is to ensure that when he is living by himself and is financially independent, then he understands that quick money fixes aren't the answer. You're right, it's far far too easy to do nowadays, that's the scary part!

Prothet_of_Doom

12% interest ? You'll regret that. Firstly the loans will never ever be repaid in full, secondly, he'll resent that you demanded 10 times what you'd get in an ISA, and thirdly he's learnt nothing and will be £20K in debt to drug dealers next time.

(Believe me, that's the way it goes....and they'll be offering to fire bomb the house, if it's not paid within 36 hours)

as a parent, there but for the grace of GOD go the rest of us, and we really feel your pain.