Advice sought: child & partner are in so much credit card debt

moveover0

hello.

as the title says, my child and his partner have got themselves in so much debt and as they're not seprating they are trying to split it equally but as it's mostly on cards they're struggling to figure out the fairest way.

they have 2 small children and we are trying to help them find the best solution (amongst a messy split up).

putting the emotional aspect to one side, the facts are that they are coming out of one IVA in October but as it is with people, they've ended up borrowing to pay other debts and got themselves into a right mess.

they owe around £25,000 and rent a place (both earn minimum wage)..

they are moving out of the rented place and moving in with the respective parent(s).

any advice as to how we can best resolve this would be very appreciated (we can't get a consolidated loan to cover this as part of the debt is a loan we got for them under our name as it has a low interest rate).
i know this is vague but we are all at our wits end - whilst maintaining a "happy families" image for the little ones.
thanks

Ebe_Scrooge

Firstly, my sympathies for what must be a very difficult situation.

However, putting aside any emotional issues and focusing solely on the facts ...

If the debt is on cards, they are not legally "shared". If your son is the primary cardholder then the debts are his, if his partner is the primary account holder then they are hers. That's the cold hard legal standpoint. Morally, of course, they would probably be viewed as shared debts.

That aside, there are a few options. If the debt is very large in comparison to their income then it may be possible to phone the card issuers and come to an arrangement. There's the possibility that the card issuer may freeze the interest and allow the capital to be paid off over time. This will result is some very serious black marks on their credit files, meaning they'll find it nigh-on impossible to get any further credit for the next 6 years or so. But I'm guessing their credit history is already tarnished if they've currently got an IVA.

The "cleaner" alternative is simply to cut back on spending, take on extra work if possible, and throw every penny at the debts. This is where drawing up a Statement Of Affairs can be a real help (available on the Debt Free Wannabe board on this site). You say they're moving back in with their respective parents ? Presumably this means they'll be saving a reasonable sum each month on rent - I don't know whether the amount they're saving would mean they're then able to repay the debts within a reasonable period ?

This, of course, assumes they can come to an amicable agreement about splitting the debts fairly. If they are going to need to get a solicitor involved to sort out who owes what, that will just add to their costs.

It's just a couple of suggestions to get thinking about - others will no doubt have plenty of other helpful advice.

moveover0

thank you for these suggestions.
i'll get them to try the card companies to freeze the amounts, but as it's spread over so many i'm not sure how that will play out. we will see.

thanks again

Ergates

moveover0 wrote: »

thank you for these suggestions.
i'll get them to try the card companies to freeze the amounts, but as it's spread over so many i'm not sure how that will play out. we will see.

thanks again

Get one or both of them over to the Debt-Free Wannabe board:
https://forums.moneysavingexpert.com/forumdisplay.php?f=76
with an SOA (statement of affairs) - there are templates etc.
There are lots of helpful people on that board who can make suggestions about areas in which they can cut-back and make savings etc, to help clear debt quicker.

18cc

If as you say they are on a minimum wage and owe £25000 then there was clearly no way they can ever afford to repay the debt

One option might be to investigate bankruptcy which would obviously clear the slate but does have consequences

born_again

I know it's hard for you. But they have to deal with this themselves.
DO NOT get yourself into debt to bail them out....

Get them to speak to a debt charity such as STEPCHANGE who do not charge for their services.

molerat

^^ Agree with this, help them with advice and encouragement but do not try to bail them out - unless you have the money to throw away.

Sncjw

The reason they can’t consolidate the amount is because the lender will be assessing them on affording £50k of debt as it’s £25k loan on top of what they owe. If they are struggling now they will definitely not get a consolidated loan.

born_again

If they were to look at a £25K loan. How are they going to afford the repayments if they have moved to different addresses and earning min wage.
Clearly with a IVA they are not going to get a low interest rate. Also moving to separate addresses is going to flag up alarm bells with a lender as there will be no security on the loan.

A4445

I don’t quite understand if they were already in an IVA how were they able to borrow a further 25k? It must be very high interest, it does seem irresponsible for lenders to continue to lend.

macman

OP, the part of the debt that you obtained for them in your name is not their problem, it's yours. If they default on it then it's you that is liable and will have their credit record trashed.
Consolidation loans are never the answer.