Struggling with debt? Ask a debt adviser a question

Tasha27

Hi can I just ask a quick question. If you part own a home and have debt of around £19,000 is it best to set up a DMP or go for an IVA been advised IVA by Payplan but DMP by StepChange. Have to add in 5 years I will be 60 and my partner who is pay the mortgage will turn 65 So going to be hard to re mortgage but really don’t want to do that anyway, j work part time and am a Carer for my 19 year old disabled son who will still be living with us in 5 years time so it’s not possible to sell the house. Really struggling to decide which plan to go with

StepChange_Rachael

Hi

Thanks for replying with the updated information. I’ve caught up on the previous post and reply from Joe.

In terms of mis-selling, it's likely to be difficult to dispute, especially if the agreements were taken out with wrong information provided to the lender. they're likely to view this as fraudulently taking out credit and pursue the debt as fraud. You could argue that the checks the creditors took to check affordability wasn’t satisfactory but this starts to lean into legal advice and you’d probably need to access a legal representative to pursue this route.

In terms of PPI it’s historical mis-selling, it’s unlikely you’d be able to reclaim PPI after 2012, from this point there was processes in place to stop mis-selling. You can check PPI for free until 29th August of this year and the MSE website has information on how to do this, there’s no harm in checking all the loans for PPI just in case.

I think you’d have to dispute the debt through mis-selling and complete a PPI complaint letter separately. If you use a free PPI check service like the one on the MSE website then it’s set up to complete online, so a separate dispute letter would be needed.

If there are multiple debts being disputed for one company then yes I think you’d be able to dispute them together but this would be worth checking with the individual lenders as different lenders can have different complaint routes to follow.

I hope this helps.

Thanks
Rachael

DoomDebt wrote: »

Hi StepChange_Joe,

For info, the final figure of debt is £26k.... I've got a plan to tackle this, but obviously this is going to cost a lot of money over a long time. I was hoping to reclaim some money from these debts to help pay it back. You mentioned in your previous reply "It’s worth bearing in mind that paying towards a debt while disputing it can harm your claim." Can you explain how so? As I was hoping to reduce the settlement figures for two loans as a result of a complaint so that I could then afford to settle them. I might need to revisit that.

Regarding complaining about mis-selling of loans and reclaiming any PPI... well I've just about got to the bottom of the problem now, and there were 75 payments from 15 different companies. This is quite a lot to get my head around, and I don't have the resources to be able to look into every agreement in detail to try and figure out what is going on. Could you please advise on:
1. What constitute as mis-selling so that I can claim that. My partner clearly hasn't been able to afford some of the loan she's been given, but the information she supplied regarding incoming and expenditure may have been wrong.
2. If I'm to claim mis-selling on multiple loans by one company, can I just whack a list of loan reference numbers on one complaint, or would they need to be filed separately.
3. Can I complain about mis-selling of a loan AND reclaim possible PPI in the same complaint, or should I do one MIS-SELL and one PPI per company?

Regarding PPI - I think all of the loans here were obtained after 2012, does this mean they are not likely to have any PPI on them at all?

Sorry for all the questions, I'm just trying to get my head around the logistics of it!

Thanks so much for you help so far :beer:
Thanks,
DoomDebt

lbonline

Hi,

Looking for a bit of advice, this may or may not even be the best thread to ask it in but I digress. When I was a bit younger I got caught up with some poor financial decisions such as lending money to "friends" who didn't pay me back, living beyond my means and getting caught up with a credit card that I went too deep into and could only afford the minimum repayments. My bank got me in and we got it all put into 1 loan that I could afford to clear in 3 years. As it stands that loan is due to clear in March 2021 and currently has £5500 left to go.

My question is that I'm currently saving up to hopefully buy a property and am currently on course to have a sufficient deposit for a shared ownership scheme by the summer this year. I have enough saved that I could clear the personal loan outright however it would effectively halve my deposit savings. Would a debt like this severely damage my chances of being accepted for a mortgage and therefore would it be a better choice to clear the loan first and delay moving out?

StepChange_Allen

Tasha27 wrote: »

Hi can I just ask a quick question. If you part own a home and have debt of around £19,000 is it best to set up a DMP or go for an IVA been advised IVA by Payplan but DMP by StepChange. Have to add in 5 years I will be 60 and my partner who is pay the mortgage will turn 65 So going to be hard to re mortgage but really don’t want to do that anyway, j work part time and am a Carer for my 19 year old disabled son who will still be living with us in 5 years time so it’s not possible to sell the house. Really struggling to decide which plan to go with

Hi Tasha

Thanks for posting.

The advice you've been given already will have been based on a debt advisor seeing all of your figures, so they'll have been in a much better position to assess your options than myself with only the information on here.

I can't speak for payplan, but from a StepChange perspective, any debt solutions we recommend we'd fully explain the reasoning for that advice. If an IVA wasn't coming up as an option with us, as a debt advisor with the figures in front of me I'd be able to explain to you the reasons for that.

For example, if the equity in your house is more than your debt total, it's unlikely an IVA would be the best solution. And if your available money for debts each month meant that you could clear your debts in a similar length of time to an IVA, again an IVA wouldn't be the best option.

I'd suggest giving us a call back and we can look at all your information and advise you why an IVA isn't coming up as an option, if indeed that is the case.

Best wishes

Allen

StepChange_Allen

lbonline wrote: »

Hi,

Looking for a bit of advice, this may or may not even be the best thread to ask it in but I digress. When I was a bit younger I got caught up with some poor financial decisions such as lending money to "friends" who didn't pay me back, living beyond my means and getting caught up with a credit card that I went too deep into and could only afford the minimum repayments. My bank got me in and we got it all put into 1 loan that I could afford to clear in 3 years. As it stands that loan is due to clear in March 2021 and currently has £5500 left to go.

My question is that I'm currently saving up to hopefully buy a property and am currently on course to have a sufficient deposit for a shared ownership scheme by the summer this year. I have enough saved that I could clear the personal loan outright however it would effectively halve my deposit savings. Would a debt like this severely damage my chances of being accepted for a mortgage and therefore would it be a better choice to clear the loan first and delay moving out?

Hi there

Thanks for posting.

This isn't our direct area of expertise but I'm comfortable giving my thoughts on it. I don't think there's a definite right or wrong answer here, there are things to consider on both sides.

Firstly let's say you do nothing and just keep paying the loan as it is. The possible effect on your mortgage application, assuming the payments are up to date, is that you have this monthly commitment every month. This will likely reduce the amount the lender will let you borrow, because you have more outgoings each month.

If you repay it, will the deposit you still have be enough to get the property you're hoping for? The plus side would be that you don't have the monthly loan payment as a commitment, so may be able to borrow more. You should also check whether there are any early repayment charges for clearing the loan in full early.

Another thing to consider is that a higher deposit may result in a lower interest rate, lower monthly repayment and a lot less interest repayable over the term of the mortgage.

So all in all, it's a case of balancing these things and deciding what works best for you. I hope the above thoughts help you to see both sides of the situation.

Best wishes

Allen

Tasha27

Thank you Allen, at the moment the equity is higher that what I owe in debts (£19,000) house value is £112,000 and left owing on mortgage at present £22,000 so equity at present is £90,000 which split is £45,000 but I’ve been told that in 5 years time, which is when the Iva would finish, I wouldn’t really be in position to release equity or remortgage given my age. I’m 55 this year so I’ll be 60 when Iva will expire so they should just ask for another 12 months to be added to Iva. Is this information I’ve been given correct? My current circumstances are that I only work part time as I’m a carer for my son, so I’m not left with much to pay off the debts at the moment. And if I do a DMP it’ll take me around 20 years to pay them off, where as an IVA means I’ll be debt free in 6 years. I’m very lucky to have a partner who pays for the mortgage council tax and all the household bills in the house. Would appreciate some advice thank you.

StepChange_Kirsty

Hi Tasha,

Thanks for your post.

If your share of the equity is £45,000 and your debts are £19,000 this explains why we have not recommended an individual voluntary arrangement (IVA) for you. As you have more assets than debts we feel it is unlikely your creditors would agree to the IVA.

When an IVA is written it includes a comparison statement between what your creditors would expect to receive in the IVA versus what they would expect to receive in bankruptcy. For the IVA to be successful it would usually show that the creditors would get a bigger return in the IVA than in bankruptcy. However, in your situation your creditors are likely to see a bigger return in bankruptcy as the Official Receiver (OR) can force the sale of your property and the creditors would get all of their money back. As a result it would not be in the creditor’s interests to accept an IVA.

I have already responded to your private message before I saw this post. If you’re still unsure about the best advice I would still encourage you to contact us to speak to a Debt Advisor. You can find our contact details here.

I hope this makes sense.

Kirsty

Tasha27 wrote: »

Thank you Allen, at the moment the equity is higher that what I owe in debts (£19,000) house value is £112,000 and left owing on mortgage at present £22,000 so equity at present is £90,000 which split is £45,000 but I’ve been told that in 5 years time, which is when the Iva would finish, I wouldn’t really be in position to release equity or remortgage given my age. I’m 55 this year so I’ll be 60 when Iva will expire so they should just ask for another 12 months to be added to Iva. Is this information I’ve been given correct? My current circumstances are that I only work part time as I’m a carer for my son, so I’m not left with much to pay off the debts at the moment. And if I do a DMP it’ll take me around 20 years to pay them off, where as an IVA means I’ll be debt free in 6 years. I’m very lucky to have a partner who pays for the mortgage council tax and all the household bills in the house. Would appreciate some advice thank you.

naive_investor

I have been asked to help a family in crisis.


Mum in hospital long term. During her illness son in his 40s who has learning difficulties and struggles with reading and writing lost his job and defaulted on 2 car loans. He has returned 1 car and is waiting to hear how much he will owe after it has been auctioned off. He is in court for the second default in 10 days or so. He has no savings or assetts. He lives in council house with mum as the tennant. Not sure how long that can last as mum cannot returm home and may never be well enough.


He starts a new job next week. Despite his learning difficulties he is capable of making decisions, holding down a job, and disguising his inability to read and write.He has just never been able to manage money and will struggle to make ends meet or pay back debt.


He should never have been allowed to take on two loans. He doesn't understand percentages let alone PCP and balloon payments. He could owe £15,000



I plan to try and get help where I can. Here, CAB,Trade Union, Local Authority Safeguarding team, the court but don't know how I'll get on.


I have googled lots of information but not sure what approach to take and in what order. Please help!



What is the likely outcome?

Tasha27

Can I ask some advice on loan mid selling. I took out a loan last year to consolidate my credit cards. My circumstances at the time were that I was only working part time earning very little, while careing for my disabled son. The income I was receiving when I applied was made up of my part time wages plus benefits I received such as care a allowance and his disability allowances I was receiving for my gim, I know this was wrong but I was desperate, therefore this bumped up the income I needed to pay off the loan. Now he is 19 and trying to take over his own finances so therefore receiving his own disability benefits it’s left me with hardly nothing to live on just part time wage and a care allowance. I’ve now had to set up an IVA to pay off my debts. Do I have any rights to apply for mis-selling of the loan given my circumstances and my own income at the time?

Former_StepChange_Patience

Hi there

Thanks for getting in touch and sharing this family’s situation. I’m sorry to hear their mum is unwell, it sounds like there is a lot going on for them both at the moment.

I’ll help as much as I can with this, what happens next depends on what type of agreement was set up for the car loans. If it’s a Personal Contract Purchase (PCP) or a Hire Purchase, once the account has defaulted the creditor can take further action to collect the goods. You can find out further information here: https://www.stepchange.org/debt-info/hire-purchase-debts.aspx

If they have a court date, it’s important for them to attend and to explain their circumstances and if they didn’t get an opportunity to return their paperwork prior to the hearing, they can still try and make an offer of payment if they wish to keep the car, but the court may possibly be less willing to agree to this.

Once this has gone to court, there can be three outcomes:

• They adjourn the hearing to a later date
• Agree to place a hold on the 'possession', as long as they keep up with the agreed payments
• Ask for the goods to returned on a specific date

Which outcome may happen for them is difficult to say.

It sounds like contacting the Citizens Advice Bureau and their Local Authority Safe Guarding team would be a good place to start, if they’re a ‘vulnerable’ adult they may need additional support with their mum being in hospital.

If you would like us to have an impartial look at their circumstances, they, with your support can start a budget with us either online or over the phone and see what options we can suggest. There's no obligation to go ahead with anything we recommend and details of how you can contact us can be found here: www.stepchange.org/Contactus

I hope this helps a little and wish you all the best of luck.

Patience

naive_investor wrote: »

I have been asked to help a family in crisis.


Mum in hospital long term. During her illness son in his 40s who has learning difficulties and struggles with reading and writing lost his job and defaulted on 2 car loans. He has returned 1 car and is waiting to hear how much he will owe after it has been auctioned off. He is in court for the second default in 10 days or so. He has no savings or assetts. He lives in council house with mum as the tennant. Not sure how long that can last as mum cannot returm home and may never be well enough.


He starts a new job next week. Despite his learning difficulties he is capable of making decisions, holding down a job, and disguising his inability to read and write.He has just never been able to manage money and will struggle to make ends meet or pay back debt.


He should never have been allowed to take on two loans. He doesn't understand percentages let alone PCP and balloon payments. He could owe £15,000



I plan to try and get help where I can. Here, CAB,Trade Union, Local Authority Safeguarding team, the court but don't know how I'll get on.


I have googled lots of information but not sure what approach to take and in what order. Please help!



What is the likely outcome?