Credit card debt

notideal

Hi I'm after some advice please to enable me to help a situation involving my dad and credit card debt.

In a nut shell, due to ill health for 4 months of last year plus recovery, he has managed to total up £22,000 in credit card dept.

I believe this was due to only making minimum payments and not statement balances. Whats compounded the issue is the fact he has waited until now to raise a flag - due to his minimum payments totalling far more than his disposable income.

My farther only works part time and still has a mortgage to pay at the age of 64, therefor he has to proritise this over everything else.

As i have only have 24 hours to digest the debt issue, i could really do with some breathing space from each of the 4 credit card providers to freeze the intrest and the payments and come up with a plan to rectify.

Please can you adivse how i go about this?

Regards

Brie

Step 1 - get dad to ring the card companies and say there's a problem and he needs to have interest frozen.  Get him to tell them that he's getting a budget set up with a debt adviser who will contact them in the next couple of weeks to provide a statement of accounts/finances and make a suggestion about a repayment plan.

Step 2 - get dad to talk to a debt adviser or debt agency such as StepChange, NationalDebtline, CAP or CMA at a food bank.  Some Citizen's Advice centres also do debt advice.

Your dad has got to buy in completely to the process in order to get things sorted.  His priority debts (mortgage, council tax, food) are his top priorities with his money.  Credit cards are non priority and the card companies know this.  

Dad could post a statement of accounts on here and get some suggestions but it sounds like something more professional is required.  Don't point his to any company that's going to charge in any way or automatically suggest a debt management plan as neither is in his best interest at this point.  Neither is trying to get a consolidation loan.

If dad is really going to need your assistance and is not going with a known agency as listed above you can work with him and do things on his behalf if you have his signed authority to do so.  Any agency working on his behalf would need the same.  

Good luck trying to sort it out.  I hope it works!!!

sourcrates

Echo the above, if they don`t know there`s a problem, they cannot do anything, he has to tell them he is struggling.

Good advice above.

RAS

Basically, move his salary to a new basic bank account. Do not switch to the new account. Manually set up the new DDs for mortgage, insurance and utilities.

Pay the mortgage and essential bills.

Stop paying the credit cards. Put aside any money left after the essentials are paid into an emergency fund, particularly as he is a home owner.

Once the credit cards default, maintain some money into the emergency fund and divide anything left over between the creditors.

Not a bad idea to ask them to freeze the interest and point out the health issues.

You might want to help him put together a Statement of Affairs. If he wants to come here, people can help him try and make ends meet. Do check all deals in case he's been auto-enrolling and can get better ones. 

Longer term, will the mortgage end before he retires?

notideal

RAS said:

Basically, move his salary to a new basic bank account. Do not switch to the new account. Manually set up the new DDs for mortgage, insurance and utilities.

Pay the mortgage and essential bills.

Stop paying the credit cards. Put aside any money left after the essentials are paid into an emergency fund, particularly as he is a home owner.

Once the credit cards default, maintain some money into the emergency fund and divide anything left over between the creditors.

Not a bad idea to ask them to freeze the interest and point out the health issues.

You might want to help him put together a Statement of Affairs. If he wants to come here, people can help him try and make ends meet. Do check all deals in case he's been auto-enrolling and can get better ones. 

Longer term, will the mortgage end before he retires?

Surely he cant just default on the cards? this will affect him in years to come?

With regards the mortgage, this will be paid of in 2 years, his debt is twice the outstanding mortgage value.

sourcrates

notideal said:

Surely he cant just default on the cards? this will affect him in years to come?

What other option is there when debt becomes unaffordable ?

He should consider writing to the creditors and asking them to write off his debts on the basis his income cannot support the contractual repayments he is currently obligated to, and with 22k outstanding, its unlikely ever to be re-paid.

When your outgoings exceed your income, the only thing you can do is stop paying, your on a hiding to nowhere if you don`t, I wouldn`t have thought he will be wanting to borrow any more money, so there will be no effect in years to come, except a bad credit record for 6 years.

What Is Debt Write Off? How To Write Off Debts. StepChange

enthusiasticsaver

Realistically his only option is to contact the card companies and default.  If he is semi retired and still has a mortgage he has to prioritise that.  As @sourcrates says borrowing more is not a good option in his circumstances anyway so trashing his credit record won't matter.