Parents in debt crisis

andyse13

Hi all

Some of you may remeber me - A month ago I discovered my parents owe over £100k to 25 different creditors (lloyds tsb the worst culprits!). They also have over 10k in mortgage arrears and are behind on secured loan which is killing them (kensington finance - Borrowed 30K - Repay £411 over 180 mnths - Over triple to pay back and variqble interest which is a killer!!)

Anyway - thanks for all your prevoius advice - I have no idea how to link into my old thread or indeed find it now!!

I managed to hold off the repossesion and have 6 months to prove a good repayment history then hope to get the main mortgage company to capitalise arrears, switch to interest only and move the 30k secured loan to them - Fingers crossed x

I am half way through negotiating with creditors to reach payment agreements and will not give up - I will get there eventually!!!

I do however have a few unanswered questions that are niggiling away that maybe someone can advise on???

1) My parents have a very small life assurance policy to cover the cost of funeral expenses etc. This costs around £22 monthly. My question is will any pay out from this in the event of there death get swallowed up towards paying off creditiors? If it cannot be used to pay for funeral I might as well cancel for them. I can take care of that side of things sould it ever happen - The £22 a month sure would go towards paying off some of the debt!!!

2) On advice from CCCS who are fantastic, I have cancelled all bank accounts, direct debits etc etc. I am still awaiting acceptance of a new joint account from HSBC as they have no financial ties with them. I am paying token payments to creditors via direct transfer from my own account. My problem is some of the loan accounts etc have no paying in bank details. I have written to them and called many times. They refuse to give the paying in details as thay do not accept my offer of token payments. CCCS have advised not to send cheques as they will not cash such small amounts. Anyone any suggestions????

3) My parents both had lloyds current accounts. 1 is overdrawn by £100 the other £5k. Lloyds have refused to freeze the accounts as I am making token payments into them to clear the OD's. They have also refused to waive the interest accruing and the fixed £10 monthly fee on each account. I have written expalining this is not really helping them pay off the debt - Again any advice on my next tactic???

4) Until I can clear the main mortgage arrears, the secured debt (Kensington) are applying a £50 charge monthly all the time the account is in arrears. I have worked out the £100 I have proposed to pay will take 16 months to clear the arrears of £800. They have also refused to negotiate the interest terms, even if I can clear the arrears. How do I approach this one or, as its secured, do I have no choice but to keep paying until I can try and consolidate with the main mortgage?

5) MBNA are trying some very naughty tactics. They are offering a reduced settlement figure on a loan amount of £7,000 - they have said they would accept 3k and a credit card of 3k they would take 1k. They have advised my parents to ask friends and familiy to raise the money to pay them off. I tried to interviene and got a bit cross with the woman on the phone - basically said I could not believe they were taking on this underhanded approach to tempt my parents, who would of probably forsaken yet another couple of months mortgage payments to take advantage of this one time "offer of a lifetime". Should I not be reporting them to someone for this approach or is it legal?

I have many more questions but will leave it there for now!!

Hope to hear from you all with your advice

XXXX

P.S - I can't spell for Toffee ( will download the spell check when I get 5 mins)

Conor_3

1) Yes.

3) You can only try to get a DMP going with CCCS or similar but at the end of the day, they don't have to freeze the interest.

4) See 3)

5) It's perfectly legal and standard practice.

floss2

1. Directgov says the following:

The law says that funeral expenses must be paid before anything else is paid from the estate. The 'estate' means assets including property, savings and any other money belonging to, or owed to, the person who has died

Therefore, the funeral WILL be paid for by the policy, anything left over will go into the estate to clear any debts before being paid to beneficiaries. This applied to my mum's funeral expenses, the Coop Funerals were first call on the bank balance & life policy payout.

mightymouse

Hi

This is lthe ink to your previous post.....

http://forums.moneysavingexpert.com/showthread.html?t=501117

I will have a look and post later.........

CLAPTON

1. I think floss2 answer is fine although you may think 22 per month is a lot but that depends upon the age of your parents.

2. They will eventually give you paying in details... obviously do not offer DD or debit card payments as you will loss control.

3. as soon as they have a new bank account then you must stop paying anything into the Lloyds accounts.. simply treat it as a debt like any other .. they will probaly continue to pay the loan from the current a/c and add lots of charges etc but thats how it works.

4. if possible this should be consolidated into the mortgage.

5. It is of course against all the governement and trade guidelines etc to suggest that further loans should be taken out to pay their loans. Off hand I cant remember whether you can complain to the OFT or the financial service Obmundsman if you which to take it further.

and I think you are doing a wonderful job for your parents.. they are lucky to have such a caring offspring.