Can anyone help?

flannila

Hi,

I could have posted this in a number of forums, but since my credit report is my main worry, I'll try here first.

My 74 yr old mother is in a bit of a pickle with a £800 overdrawn current account and £700 debt sitting in an online JD Williams catalogue account. She knows she owes this money but continues to bury her head in the sand and hope it goes away. There is no talking to her when it comes to getting it fixed. To top it off she is retired and on a state pension of £135 per week and still has her household bills to pay.

The only reason I know this is because I was transferring some money over to her online and she had mentioned that HBOS had given her a new current account to help her. I knew about the online catalogue already, just not how much she actually had spent on it.

She let me look into her finances and its all a bit of a mess really. She is being charged £1 per day that she is overdrawn so round about £30 a month average. She has a private pension which pays directly into that account (to pay it off she says) of £50 a month which means that by the time she's paid it all she'll have given the bank over £1000 in charges.

I have a reasonable credit rating and have never had issues paying back - probably cos I learned the hard way from my mother who is always getting into situations like this and never learns...

I currently have 2 credit cards, an M&S one which I have £550 still to pay and should be clear by August, and a Halifax one which I owe nothing to.

I could pay her catalogue debt with my M&S one and then transfer the balance to my Halifax one as they are offering my 0% balance transfers for 15 months with 3% fee.

My problem is this. I have just bought a new car on finance this month and also a new sofa (again on finance) - in order to pay off her overdraft, I think I'd need to apply for a money transfer credit card... is that going to affect my credit rating given I have just bought car and sofa on finance both in the same month?

It's technically not my problem, but I don't feel I can leave my mum struggling with (or more likely ignoring) this problem.

Tixy

Hi

The 2 recent applications may harm your chance of being accepted for a new card with money transfers right now, but making another application now shouldn't have an ongoing affect on your credit rating (after a few months).

Alternative option given her situation she may want to consider moving her banking to a new bank with just a basic account and no overdraft facility and having her pension etc paid in to that. Then write to the 2 creditors explaining that her only income is state pension and that she can only afford say £5 to each debt per month and ask them to consider freezing interest & charges on the debts. (doing this would affect her credit file, but that probably isn't an issue in her circumstances providing she manages to live on her state pension going forward).

The debt advice charities can help provide template letters to send to the creditors if you choose this option (or look on national debtline website).

flannila

Thanks Tixy, I'm afraid she might not even get another account though - my Dad was made bankrupt a couple of years ago (he's 76) at the time he was in a lot more debt than my Mum was and I thought bankruptcy was probably the best way to go for him given his age and the fact he would be unlikely to get any more credit anyway, but now he struggles to even get a basic bank account - I have all his bills on my account just now and he just pays me the cash - if I had to do that for mum too, it would mean I would be responsible for everyone's finances... and mum tends to forget you've given her money and stops paying you back eventually, Dad at least pays me in advance. I'll speak to her and see if she's willing to try another bank on a basic account only - (I assume basic accounts still allow you to pay direct debits?)

Tixy

Yes basic accounts still allow DDs (some don't have a full debt card though). There is a link to a comparison table on this page https://www.moneyadviceservice.org.uk/en/articles/basic-bank-accounts and also info here http://www.moneysavingexpert.com/banking/basic-bank-accounts#best

Usually the easiest to get basic accounts are the co-op cashminder and the barclays basic account.

National_Debtline

Hello there,

If your father is now discharged from his bankruptcy he should be able to open a basic bank account. It's important to stipulate that it is a basic account that is required, his credit score may prohibit him from having any other type of account.

Depending on your mother's precise circumstances, she may qualify for a Debt Relief Order. The critera to have one of these is:
- be unable to pay your debts;
- have total debts under £15,000 at the date the application is approved by the official receiver;
- have assets below £300;
- not have a car or motor bike worth more than £1,000;
- have less than £50 a month spare income after normal household expenses are taken into account;
- live in England or Wales (or have lived or run a business in England or Wales in the last three years); and
- not have had a DRO in the last six years

If a DRO application is successful, most creditors cannot take action to recover your debts for 12 months. The debts are then written off after the 12 months are up.

You can read more about DROs by clicking here.

Best wishes,

David @natdebtline

flannila

David @natdebtline, Thanks but we're up in Glasgow, however it's good to know that dad should be able to get himself a basic bank account now. I'll speak to him about that.

Tixy, again cheers. Going to look into Barclays/Co-Op and go about sorting this problem out for her.

National_Debtline

flannila wrote: »

David @natdebtline, Thanks but we're up in Glasgow, however it's good to know that dad should be able to get himself a basic bank account now. I'll speak to him about that.

Tixy, again cheers. Going to look into Barclays/Co-Op and go about sorting this problem out for her.

Hello again,

Although DROs are not possible in Scotland, you do have the option of a 'low income, low asset' Bankruptcy. These cost a little more at £200. It may ave been one of these that your father had?

https://www.nationaldebtline.org/S/factsheets/Pages/01%20SCOT%20Bankruptcy/Page-03.aspx#quicklink1

Alternative, the 'Debt Arrangement Scheme' could allow her to pay off the debt at an affordable rate whilst having all of the interest and charges frozen:

https://www.nationaldebtline.org/S/factsheets/Pages/22%20SCOT%20Debt%20Arrangement%20Scheme%20%28DAS%29/Default.aspx

Best wishes,

David.