parents struggling to pay secured loan

bittersweet

hello this is a bit of a follow on from another thread I started ("does this sound right to you") but its taking a slightly different turn so i thoughti i would ask for advice on a new thread.

Parents are now not working as my dad is ill. Mum used to work part time but had to give up work to look after him . They get joint pension credits, he gets basic PIP and has an armed foces pension of £250 a month.

They have a loan with RBS which was 10k and theyve paid just less than half of it balance now 5400.
They have cut back on lots of outgoings, shopped around and change elec and gas suppliers etc but they are still struggling .
I was just looking at some of the debt managements companies but it looks like as its a secured loan they cant get much more advce than you will have to keep paying it. Havent contacted the bank yet but before we do I just wanted to have a bit of info to hand in anticipation of being told they cant help
many thanks

[Deleted User]

They could ask RBS - the bank might be sympathetic but at the end of the day, the loan is secured so if they default the house is at risk.


The other answer is to either earn more or pay less out every month. It's probably not what you want to hear but this is why people need to think very carefully about secured loans.


Do they have a credit card they could get 0% on?

fozmcfc

Firstly, £5400, isn't a huge amount. I'm wondering if the bank would even consider drastic action against them, unless they actually stopped paying altogether.

Can you and other family members not give assistance, even £10 or £20 a month each towards it, not a huge amount, might help.

Other things to consider this is probably the most important payment to make, because of the house being at risk. Maybe other arrangements could be made elsewhere to pay reduce amounts. Gas, electric, phone bills etc...none of the major companies would cut peoples supplies off, for being a few weeks or a month in arrears.

Debt free wanabee board members, could well come up with other cuts that could be made.

bittersweet

Thanks Ill have a look into what else they could reduce. Not much chance of family help really as I am about to go on maternity leave so cant really help.

They dont have a credit card and would never consider one.
I know , with hidsight, they shouldnt really have got to this stage. When they were both working they could pay it - the loan actually came about because they were buying a business property.(small hotel) At the last minute, a week before exchange of contracts, the bank contacted them and said they couldnt lend the full amount, it would be 10k short than the figure applied for but they would put a 10k overdradt in place. They had no choice to accept with contracts due to exchange.
Business then wasnt as busy as they expected - they did try really hard . It was a small hotel and they found out when they moved in that the previuos owners had been accepting DSS tenants so the accounts were made up from dss payments - when they first looked at the business the residents had obviiosuly been sent out for the day and there was no mention of who the 'guests' were.
A great chunk of the 10k was spent on replacing beds, carpets etc - things you wouldnt normally have to fork out for the minute you moved in.
They should have looked much much more closely before they bought it but to be honest they are far too nice and polite - whatever the vendor would have said, they would have believed without question.
Eventually they both had to get jobs - this is when the bank agreed to turn the overdraft into a loan. Before they stopped working they ensured the loan and mortgage was paid before anything else
But actually heres something thats just struck me - they are now paying interest on both the mortgage and the loan - I dont know an awful lot about things like this but surely thats going to be more expensive for them with regards to interest. Would it have been a better idea to add the 10k to their mortgage?
Hopefully, by next year my mum will be able to go back to work - my dad will be undergoing spinal surgery and once hes ok to be on his own, things will improve.
Anyway sorry to go on, hope this makes sense
Thanks

jonesMUFCforever

What became of the hotel - was it sold?

Smedders11

What's the loan secured against?

You could also head over to the Debt-FreeWannabe board and post a Statement of Affairs on their behalf. The folk over there are good at cutting bills and expenditure, and boosting income.

[Deleted User]

The only solution is for them to talk to the bank and see what if any help they can offer.

bittersweet

Thank you everyone. Ive been in touch with stepchange they may be able to make token payments until my mum goes back to work