How best to clear CC debt?

renard_2

My daughter foolishly married a spendthrift with a bad credit record. As he couldn't get credit, he persuaded her to take out a credit card, with him as second card holder. He then (surprise, surprise) ran up a load of debt on the card.

When she began divorce proceedings (not because of the debts), he moved out for unknown parts, leaving her with the children and, of course, responsible for his credit card debt as the card is in her name.

He pays her absolutely nothing, his whereabouts are unknown, and there is no likelihood of him ever agreeing to settle his debts.

My daughter is now struggling to look after the kids, pay the mortgage etc while also trying to clear the CC debt (about £7,000). She works and also gets the appropriate state benefits.

She has fallen into the "minimum payment" trap, as that is all she can afford to pay each month on the CC balance. She has applied for a better credit card in order to transfer the balance advantageously, but was turned down for "poor credit rating" - not surprising in view of her husband's record.

She now intends cashing-in an endowment policy, and use the money to pay off the credit card balance. It is a shame that she will lose the endowment in this way.

I would be most grateful for any advice that I can pass on to her as to the best way to clear this CC debt.

CLAPTON

Endowments are generally poor value so cashing it in is a good idea anyway.
Using it to clear the CC seems a good idea too.

Otherwise, as her creit rating isn't too good her next best approach is to ask her parents/family to help.

renard_2

Thanks, CLAPTON.

If you mean her parents could give her cash, well, we do help a lot - but there is a limit to what we can afford!

I thought I read somewhere that it is inadvisable to cash in an endowment, as you get a poor return by so doing?

Any other advice from anyone else will be greatly appreciated.

CLAPTON

best to look at the actual performanced of the endowment rather than general 'reading' .. how much has she paid in, what is the current value, what is the projected value etc.

GeorgeUK

Also get her to check her credit record. (Free at experian)
She should check that her credit history is not still linked with her husbands and that all the cards/accounts on her history she knows about (just incase)

Has your duaghter asked the bank if she can change to a Life of Balance (LOB) account? It would mean less interest. If she's been keeping up with repayments, she may get it.

Just make sure she doesn't have too many credit checks at a time. Usually 2 in a 3 month period is advised before excessive requests impact the credit score even more.

Not sure if citibank will offer her something as it seems from the article that those without good scores may be accepted. I'd also suggest that she call up whoever turned her down for the CC and ask if a LOB account would be possible instead.
http://www.moneysavingexpert.com/cards/balance-transfer-credit-cards#stable

egamar

renard wrote: »

I thought I read somewhere that it is inadvisable to cash in an endowment

You did indeed. Unfortunately not in this thread so far: good job you read more widely!

renard wrote: »

as you get a poor return by so doing

Generally speaking, yes : but of course it depends on the circumstances. Selling the policy (to a third party - not the issuer) can produce a better result, but it depends on many things. Post in Mortgages & Endowments or Savings and Investment for more coherent and reliable advice than you've had so far.

renard wrote: »

I Any other advice from anyone else will be greatly appreciated.

This maybe a completely ridiculous suggestion given what we know of the organisation - but doesn't the CSA (or whatever it's become) know where your daughter's ex husband is? (I assume she's involved the CSA, I'm sure they must have got one or two of several million cases right!)?

If the ex can be located your daughter may be able to enforce a civil judgement against him for his debts (even if they are on her account they are his debts) through the Small Claims Court.

Such judgements do (I understand) remain valid for 6 years, so even if he's penniless right now, if he wins the lottery in 6 years time (or gets a job or gets mugged and gets £100,000 from the Criminal Injuries Compensation Board or is involved in a car accident and gets compensation from the insurance company etc etc ) then she can grab her share.

Finally: she should get proper advice before doing ANYTHING (and getting replies in here does NOT constitute proper advice - even from me ). There's the CAB, CCCS and one other place I can't recall. There's a generally informative poster in various threads who has the details in his sig.

GeorgeUK wrote: »

Also get her to check her credit record. (Free at experian)

Is it free? I thought it was £3. I ought to check mine, but I refuse to pay £3 to have someone send me information abut me! Daft, I know

GeorgeUK wrote: »

She should check that her credit history is not still linked with her husbands and that all the cards/accounts on her history she knows about (just incase)

This is very good advice: if you or your daughter don't quite get what it means, keep asking in here until you do. If the ex- is using your daughter's address as a previous address (quite likely) and if your daughter has retained her married name (probably) or obtained credit in her married name (definitely from what you say) then this could be a BIG problem for her.

GeorgeUK

To check your credit report at experian is free.

To get a credit score, it costs £2/£3. I never advise this as different organisations work it out differently so you are paying for something that no other organisation may use.

Free to check though - online

egamar

GeorgeUK wrote: »

Free to check though - online

B*gger: one of those 30-day free trial and cancel jobs! Yes, I know it is a genuine straightforward offer in this case, but I get the same response to those as I do to spiders! Thanks for the pointer tho' George - it's genuinely useful for those who aren't as paranoid as I am!

GeorgeUK

Lol - i know what you mean egamar. I was looking at how to cancel an equifax membership for someone. They really don't make it easy.

I was lucky i chose Experian which actually gives you the contact details without any problem.

renard_2

Many thanks for all the valuable advice from everyone who has responded.

GeorgeUK wrote: »

She should check that her credit history is not still linked with her husbands and that all the cards/accounts on her history she knows about (just incase)

Has your duaghter asked the bank if she can change to a Life of Balance (LOB) account? It would mean less interest. If she's been keeping up with repayments, she may get it.

Please can someone explain how she can check the fine detail of her credit history? I thought more than one agency held records, so would she have to contact them all?

Surely, whether she likes it or not, her credit history will always be linked with her husband's? Also, I thought that once an address was "tainted" by association with a bad debtor (her husband in this case), you were stuck with it? This is a whole new world to me, so any advice greatly appreciated.

And I would be grateful if someone could please explain about a LOB account. I've never heard of it, so any information will be welcome.

egamar: Thanks for your detailed reply and advice. She wants shot of him for good, out of her life, so does not even want to pursue him through the CSA or courts - her decision! I will try to get her to see the CAB.

YorkshireBoy

renard wrote: »

Please can someone explain how she can check the fine detail of her credit history? I thought more than one agency held records, so would she have to contact them all?

How to order your credit reports

Surely, whether she likes it or not, her credit history will always be linked with her husband's? Also, I thought that once an address was "tainted" by association with a bad debtor (her husband in this case), you were stuck with it? This is a whole new world to me, so any advice greatly appreciated.

You're not (usually) 'associated' by an address. However, you are associated by a financial connection...known as a 'financial association'. Financial associations are created by joint accounts, such as mortgages, current accounts, and loans - but NOT credit cards. You can financially disassociate yourself from someone only when all 'joint and several' borrowings have been settled and accounts closed, or the other party has been removed from the account.

One tip when ordering your (I would suggest) £2 credit reports...tell your daughter NOT to enter her ex partners details. Doing so would, in itself, create an association with the credit reference agency. If such an association exists (because it's been registered by a lender), it will be picked up anyway from the search of your own file.

You may find Experian's 'Your credit report explained' booklet useful. It's sent with your £2 statutory report, but can also be viewed/downloaded from their website at www.experian.co.uk/consumer/index.html (click downloads and scroll down to the link).

And I would be grateful if someone could please explain about a LOB account. I've never heard of it, so any information will be welcome.

LOB is an abbreviation for a 'Life Of Balance' card. These low rate APR cards are alternatives to constant 0% rate tarting and can be useful for long-term debt reduction planning since you avoid the worry (and cost, in the form of the now more prevalent BT fees) of finding new 0% deals every 6/9/12 months or so.