daughters debts

Fibromacc

My daughter and her partner are in arrears with pretty much everything. My daughter is 21 and is about to return to work after maternity leave. She lives with her partner who works full time. I don't have any income details or list of creditors but just looking for some general advice to pass on.
They are in arrears with council tax having broken a repayment agreement. They are now being threatened with bailiffs unless they make a substantial payment by the 1st of September and them increased payments which they can't afford. They have a car on hire purchase which is also in arrears but having spoken with the finance company they have been told that they can't sell the car and even if they hand it back they will then be liable for the outstanding balance which is £6000 and again they don't have access to that sort of money. They are also in substantial arrears with their energy suppliers and have a number of other smaller unsecured debts which they are not currently paying. They are not allowing a reasonable amount for food etc especially as my grandson is now eating proper food.
I get the impression that they have broken repayment agreement with the energy suppliers as well.
They said they have tried step change who said get rid of the car which isn't really an option as it would still have to be paid for and also her partner wouldn't be able to get to work as it's top far to walk and no suitable public transport.
Most pressing thing is what happens if they can't pay the council tax? What can the balifs actually take considering they don't have any real assets. The only thing they own is a 5 years old tv and some furniture. And given that they have a 7 month old son.

thriftylass

Sorry to hear your daughter is in such dire straights. Unfortunately, I don't have any knowledge about what will happen in the imminent future in regards to the council tax bill.

Will their situation change much once she starts earning again. If not, then sth needs to change as they don't have the money to live like this. The car could go. Yes, it would mean there are still £6000 to pay (could they afford this in the first place?, sorry to sound harsh but that's a lot of money for a car at her age) but they would save all the associated outgoings, fuel, tax etc. Could her partner take a bike, a car share etc (how far is it?).

Are you good at budgeting? Could you sit down with them and go through the numbers, post a SOA here? Was is just maternity leave that caught them out, being one salary down or are they not very good at managing their money?

I know these things don't solve the current issue of the threatening bailiff but need to be addressed to avoid this getting worse.
Good luck

Angry_Bear

Fibromacc wrote: »

Most pressing thing is what happens if they can't pay the council tax?

Although highly unlikely, it's possible that they could actually go to prison for non-payment of council tax so it's really important they call the council and get a new agreement in place. Going by other posts on here, bailiffs are unlikely to be helpful, so look around for tips on how to avoid the bailiffs until the debt is passed back to the council. There is no benefit to the council in forcing bailiffs or court proceedings onto your daughter and her partner if they show a willingness to pay up, so councils are usually keen to come to an amicable agreement (may be harder if they've already broken one).

It may be worth giving the car back and defaulting on the outstanding payments if they are in real debt crisis (which it sounds like they may be). Stepchange usually give good advice, even if it's not easy to hear.
Could your daughter's partner cycle to work for a while until they get back on top of things?
The best thing for them to do is do a proper budget and work out how they can live within their means, then work out how to address the debts. Paying arrears on council tax, rent/mortgage (?) and utilities comes first. Other debts come a long way down the list.

ETA: Don't panic too much about the prison thing, it's really a final option for those who are able to pay and refuse to. Long before then the council will instruct bailiffs (as it seems they have), and may go for an attachment of earnings order so that the money is removed directly from either your daughter or her partner's pay packet. Again it's really worth them working out a realistic liveable budget in case this happens.

EssexHebridean

Ahh that's a difficult situation for you as a parent to be in, all the more so because sadly you can't have a lightbulb moment for someone else. Do they want to sort their situation out? Have they acknowledged that it's not sustainable going forwards?

If they don't have enough money coming in to cover basic expenses then that is a different matter to a situation where they have sufficient income but simply don't have the knowledge to budget for using it correctly.

Unfortunately without having a lot more information there is a limited amount of advice that we can offer.

Fibromacc

It was a bit of a perfect storm. When they bought the car they were both earning reasonably well. Then my daughter got pregnant(not planned) and her partner lost his job and had 6 months of zero hours contracts/jsa. Because of the baby they had to move - private sector rent. And it wasn't an easy pregnancy so my daughter went on maternity leave much earlier than planned. Her partners new job was held up by waiting for dbs checks which took longer because of the Christmas break so that delayed his start date by nearly a month.
So it was just a run of bad luck. And 2 young people setting out in their first house and like a lot of people got sucked in to buying things that they didn’t necessarily need or afford. Her partner is very immature and also autistic and wants everything yesterday and dosent think about the long term consequences. Very impulsive. He works 12.5 hours shifts it's not a road you would want to cycle down narrow no streetlights but a busy main road plus it's quite a long way from their house. Not sure about lifts its a bit of a funny place to get too and quite a lot of people who work there live in the oposit direction. But if they get rid of the car they will still have to pay for it. They are not allowed to sell it privately they were told that they are only allowed to sell it to certain garages? And they certainly wouldn't get top dollar for it. And also the finance company said that they don't do repayment plans so they would then have to pay the remaining outstanding balance minus whatever the sale price. And they don't have that sort of money.
I can't help as we barely scrape by and no rich relatives. I know all about preparing a soa as my husband ended up going bankrupt several years ago as it was the best option at the time. It depends on if her partner will let me help we don't exactly get along very well but I am prepared to help them if he will let me. I have told her to join this forum but I think they are still in ostrich mode.

Fibromacc

They have spoken to the council who want a payment of £150 by 1st of September and then increased monthly payments of around £200. neither of which they can afford to pay.

sourcrates

EssexHebridean wrote: »

Unfortunately without having a lot more information there is a limited amount of advice that we can offer.

I agree with this, its not easy giving advise through a 3rd party, when the circumstances are unclear.

As a basic rule of thumb, council tax/mortgage or rent/utilities are all essential payments, getting behind on the CT can lead to all kinds of problems, not least county court bailiffs, who dont always act in that persons best interests.

Any unsecured credit debts can be ignored for the time being, the car payment looks unafordable from what you have said, if they continue to fall behind on payments, it will be repossessed anyway.

Without having actual figures to work with theirs little else to say, they need to sit down, work out how much money is coming in, budget for essential payments and food, prioritizing the CT, then pay the unsecured debts £1 each for time being, along with a letter to each creditor explaining there circumstances.

Without more specific info, thats all i can say really.

sourcrates

Fibromacc wrote: »

They have spoken to the council who want a payment of £150 by 1st of September and then increased monthly payments of around £200. neither of which they can afford to pay.

Fibromacc wrote: »

They are not allowed to sell it privately they were told that they are only allowed to sell it to certain garages? And they certainly wouldn't get top dollar for it. And also the finance company said that they don't do repayment plans so they would then have to pay the remaining outstanding balance minus whatever the sale price. And they don't have that sort of money.

Ignore what the council are asking for, just pay what they can afford to, and keep paying until the debt is satisfied, dont engage in pointless tooing and froing, if bailiffs call, keep doors locked, and dont let them in, they will only visit 3 times, then they pass the debt back to the council.

The car finance place may not do repayment plans, but the debt collector they sell the debt to will.

This wont take place overnight, it can be a good few months from initial repossession to them starting to chase the shortfall, and if all they can afford is £1 per month, then so be it, a court would only ratify the same arrangement.

fatbelly

EssexHebridean wrote: »

you can't have a lightbulb moment for someone else.

I thought this hit the nail on the head.

If they come on here we can give a lot of help and ultimately there is always a way forward.

If they do a voluntary termination on the HP it becomes a non-priority debt.

The council tax and rent arrears (which they probably have) are priority debts. If they have a tv they must pay for a licence and while they have a car they must insure and tax it.

Other stuff is lower priority. Even the gas and electricity (those will go to prepayment meters) and the water authority (who will get a ccj eventually but will have schemes to help those in debt).

But unless they want to deal with it, the whole situation will probably get worse before it gets better.

Potbellypig

Can't give anymore advice to you on the technical side of things, but try to reassure your daughter and her partner that they are still very young and they have a lot of time to get their finances in order. It's a lifetime commitment to proper budgeting and financial mangement. We all make plenty of mistakes along the way.

As for the car though, I would recommend seeing a way to getting rid of it. They will default but can pay what they can afford to the default for now, plus as someone else said, save on fuel, insurance etc.

Windofchange

The I must have a car because I live miles away from work comes up on here a lot. It's not an argument I buy in to. I used to bike 10 miles each way to work on a push bike, and it wasn't down lovely tree lined streets - it was up and down some fast roads and urban rat runs. There is always a bus or a train that can be caught unless they are in the outer hebrides, and even then...

I agree with the above re: losing the car. It sounds to me as if it is a nice to have as opposed to a must have. If things are so tight that finding £150 by the end of the month for the council is out of the question then I'm not sure what hope they have of paying any of this down without bankruptcy etc.