Looking for help in the best way of paying off large debts

EssexHebridean

I'm assuming from this situation that your Son is very young - early 20's perhaps? If so then he won't really have been a victim of credit card rates being increased without his say-so - these days you have to actively agree to any increases - a far cry from the days years ago where you'd hit a £2k limit, and the card company would promptly double it to £4k without even asking if that was wanted. I got caught with exactly that situation back in the early 90's - ended up with a chunk on a card and an overdraft and NO idea how to dig my way out. I too went to my parents - as one does - and they sat down with me and reminded me about budgeting, offered suggestions of the best ways of dealing with things, and gave me the confidence to approach the bank to negotiate payments to clear the debts. They said right from the start though, they were not giving me a penny to pay towards the debts - they would give all the advice needed, but no cash, as if they bailed me out, then how would I learn? they were right too - I paid off every penny myself, there were no F&F's available back then, it was just sheer hard slog, and going without things until it was cleared. And I was SO proud when I got to the end of those payments! It taught me incredibly valuable lessons too - and that was the last time I was ever in significant "problem" debt until such time as we took on a mortgage. 

By all means advise your son on the things he needs to do - but HE needs to do them. By taking all the steps for him, you would just be just infantilising him, he's a grown adult and needs to learn to  manage his own affairs, and manage them responsibly. If he is old enough to set up home and have a child, then he is definitely old enough to not be running to the Bank of Mum and Dad at every turn! If you bail him out now - either by taking all the steps for him, or by giving him money, I'm afraid you are at the beginning of a long road, and this will not be the only time you will need to do it. The advice you're being given here (by others as well as me) may well feel brutal - but it is from the position of people who have been there themselves - from one side or the other - or simply from the experience of a lot of years combined experience here. 

Make suggestions to him about what he needs to do (so checking credit records, stopping payments to the DMP until he gets his budget under control, chasing the default on the final account, prioritising building and emergency fund etc) but then give him the space to take the steps. Remind him that he can always ask you for further advice, or that he can post here for that advice.  

Also - echoing the comment on the credit card you have given him - he's on a DMP, and so should not be accessing further credit. You really need to revoke the permission on that, and let him know he is no longer able to use it. His priority should be sorting out his budget so he is living without credit. If work expenses are an issue, he may well be able to approach his company with regard to getting these paid back on a faster timeline than the standard. 

lilmorph

EssexHebridean said:

I'm assuming from this situation that your Son is very young - early 20's perhaps? If so then he won't really have been a victim of credit card rates being increased without his say-so - these days you have to actively agree to any increases - a far cry from the days years ago where you'd hit a £2k limit, and the card company would promptly double it to £4k without even asking if that was wanted. 

If only it was early 20s, it would be bad enough. He is mid 30s and this needs sorting out now with one child and another on the way. It looks to be at least 6-10 years to pay off these debts without any help, that is excluding what he owes his mother, sister and I. 

I definitely want to assist both financial and advising. Although I agree he should get it sorted himself. I used to have cards and loans in the £30-40k bracket myself but that wasn't a problem for me. I still have credit cards with over £80k of available credit from the days of ever increasing balances but all are paid off each month. So I am not perfect or unaware of how to manage (juggle) large credit card balances. My challenge is how you deal with it when you take it that step to far as he has and there is some great advice here which has helped on that side. My concern with not helping financially is there seems to be a one size fits all solution advised, which isn't bad but I like to make my own mind up after listening to the advice. 

EssexHebridean

lilmorph said:

EssexHebridean said:

I'm assuming from this situation that your Son is very young - early 20's perhaps? If so then he won't really have been a victim of credit card rates being increased without his say-so - these days you have to actively agree to any increases - a far cry from the days years ago where you'd hit a £2k limit, and the card company would promptly double it to £4k without even asking if that was wanted. 

If only it was early 20s, it would be bad enough. He is mid 30s and this needs sorting out now with one child and another on the way. It looks to be at least 6-10 years to pay off these debts without any help, that is excluding what he owes his mother, sister and I. 

I definitely want to assist both financial and advising. Although I agree he should get it sorted himself. I used to have cards and loans in the £30-40k bracket myself but that wasn't a problem for me. I still have credit cards with over £80k of available credit from the days of ever increasing balances but all are paid off each month. So I am not perfect or unaware of how to manage (juggle) large credit card balances. My challenge is how you deal with it when you take it that step to far as he has and there is some great advice here which has helped on that side. My concern with not helping financially is there seems to be a one size fits all solution advised, which isn't bad but I like to make my own mind up after listening to the advice. 

I'll be honest - I suspected that might well be the situation. He needs to grow up and start acting like an adult, really, doesn't he. The problem is, for that to happen, he has to be treated like an adult too.

One possible contribution you could make, in a more practical way, is to say that for every 2K of debt he clears, you will pay 10% of what he owes to his sister. that way you help him - he owes less - but you also help his sister who has been kind enough to loan him money, presumably also on the basis that he would pay her back, but she must now be thinking there is no chance of ever seeing any of THAT back! Obviously the figures are just a guideline, but I'm just trying to provide suggestions which help tackle the debt, but leave him to deal with the "official" debts himself.  Aside from anything else, I think if I were his partner I'd be pretty disgusted that he was willing to hold his hand out to Mum and Dad at his age! bad enough that he might lose his own self respect over this, but worse if he loses her respect, too. 

Rob5342

Of course it's up to you what you do, we can only offer advice based on our own experience, but a lot of us have been through similar experiences.

I think you need to look at this long term. 6-10 years to pay the whole balance might be 4-6 years once he gets on a budget and has put money aside for settlement offers. That's not all that long if it gets him into habits that stop him getting into debt again for the next 30 years. Alternatively giving or lending him money now might mean he never learns those habits and ends up back in the same position in 10 years time.

lilmorph

EssexHebridean said:

lilmorph said:

EssexHebridean said:

I'm assuming from this situation that your Son is very young - early 20's perhaps? If so then he won't really have been a victim of credit card rates being increased without his say-so - these days you have to actively agree to any increases - a far cry from the days years ago where you'd hit a £2k limit, and the card company would promptly double it to £4k without even asking if that was wanted. 

If only it was early 20s, it would be bad enough. He is mid 30s and this needs sorting out now with one child and another on the way. It looks to be at least 6-10 years to pay off these debts without any help, that is excluding what he owes his mother, sister and I. 

I definitely want to assist both financial and advising. Although I agree he should get it sorted himself. I used to have cards and loans in the £30-40k bracket myself but that wasn't a problem for me. I still have credit cards with over £80k of available credit from the days of ever increasing balances but all are paid off each month. So I am not perfect or unaware of how to manage (juggle) large credit card balances. My challenge is how you deal with it when you take it that step to far as he has and there is some great advice here which has helped on that side. My concern with not helping financially is there seems to be a one size fits all solution advised, which isn't bad but I like to make my own mind up after listening to the advice. 

I'll be honest - I suspected that might well be the situation. He needs to grow up and start acting like an adult, really, doesn't he. The problem is, for that to happen, he has to be treated like an adult too.

One possible contribution you could make, in a more practical way, is to say that for every 2K of debt he clears, you will pay 10% of what he owes to his sister. that way you help him - he owes less - but you also help his sister who has been kind enough to loan him money, presumably also on the basis that he would pay her back, but she must now be thinking there is no chance of ever seeing any of THAT back! Obviously the figures are just a guideline, but I'm just trying to provide suggestions which help tackle the debt, but leave him to deal with the "official" debts himself.  Aside from anything else, I think if I were his partner I'd be pretty disgusted that he was willing to hold his hand out to Mum and Dad at his age! bad enough that he might lose his own self respect over this, but worse if he loses her respect, too. 

Yeah, lots of issues. I've not decided what to do and trying to get a time to sit down and go through everything one more time on how this might work. However we both work long hours and a long drive between us, and much as I thought doing a Zoom call would work I'd prefer to be face to face.

This has come about because he was called out on his continued need for a bit of money here or there from 3 of us. I think the embarassment of what has happened is out there now. I created a four year plan which clears all the debts and repays his sister and I on the basis of my "loan" to remove some of the high monthly payments he makes by clearing some of the debts. I have still to get some time to do a similar calculation on the basis of most of these debts being defaulted and therefore reducing those payments substantially to leave enough spare cash to live on and focus on clearing the non-defaulted debts before trying to clear those defaulted ones either by monthly payment or F&F. That may be the best option from all sides and means he is in control.

lilmorph

Rob5342 said:

Of course it's up to you what you do, we can only offer advice based on our own experience, but a lot of us have been through similar experiences.

I think you need to look at this long term. 6-10 years to pay the whole balance might be 4-6 years once he gets on a budget and has put money aside for settlement offers. That's not all that long if it gets him into habits that stop him getting into debt again for the next 30 years. Alternatively giving or lending him money now might mean he never learns those habits and ends up back in the same position in 10 years time.

That is my big concern about breaking the habits that got him there. The inability to get a new credit card or loans for a few years is obviously a help.

kimwp

lilmorph said:

EssexHebridean said:

I'm assuming from this situation that your Son is very young - early 20's perhaps? If so then he won't really have been a victim of credit card rates being increased without his say-so - these days you have to actively agree to any increases - a far cry from the days years ago where you'd hit a £2k limit, and the card company would promptly double it to £4k without even asking if that was wanted. 

If only it was early 20s, it would be bad enough. He is mid 30s and this needs sorting out now with one child and another on the way. It looks to be at least 6-10 years to pay off these debts without any help, that is excluding what he owes his mother, sister and I. 

I definitely want to assist both financial and advising. Although I agree he should get it sorted himself. I used to have cards and loans in the £30-40k bracket myself but that wasn't a problem for me. I still have credit cards with over £80k of available credit from the days of ever increasing balances but all are paid off each month. So I am not perfect or unaware of how to manage (juggle) large credit card balances. My challenge is how you deal with it when you take it that step to far as he has and there is some great advice here which has helped on that side. My concern with not helping financially is there seems to be a one size fits all solution advised, which isn't bad but I like to make my own mind up after listening to the advice. 

I'm very similar in that I like to seek different advice and then make my own decision. 

Your son appears to not really be sorting this out himself, so unless you take on the responsibility of sorting his finances for the rest of his life, then providing financial assistance at the moment will just be a reprieve until he digs himself into a deep hole again. This has played out over and over on the forum. I agree with EH that some kind of geared system might provide an incentive - paying his sister or writing off your debt to him with at a percentage of how much he pays off the debts.

You may feel like the situation has changed because he was called out, but we see a lot of people on this forum who acknowledge they are in difficulties and need to stop borrowing, but still haven't had the lightbulb moment of needing to live life differently - even people who are horribly embarrassed or stressed will sometimes just carry on without change. It will make very little difference financially if you help him financially now or in 6-12 month time when he has shown that he can manage his finances. 

I'm curious to your "one size fits all" comment - what solution do you think is being recommended that is one size fits all?

Rob5342

lilmorph said:

Rob5342 said:

Of course it's up to you what you do, we can only offer advice based on our own experience, but a lot of us have been through similar experiences.

I think you need to look at this long term. 6-10 years to pay the whole balance might be 4-6 years once he gets on a budget and has put money aside for settlement offers. That's not all that long if it gets him into habits that stop him getting into debt again for the next 30 years. Alternatively giving or lending him money now might mean he never learns those habits and ends up back in the same position in 10 years time.

That is my big concern about breaking the habits that got him there. The inability to get a new credit card or loans for a few years is obviously a help.

That's what really helped me. Once I started a DMP and stopped having access to credit then I absolutely had to stick to my budget and maintain an emergency fund as there was no fallback. It felt quite scary at first but has been hugely beneficial as I've now completely changed the way I manage things.

Be realistic about how quickly he'll be able to change his habits. I was serious about sorting things out.when I started a DMP and had a budget drawn up, but it was at least a year before I was properly in the new mindset.

lilmorph

kimwp said:

I'm curious to your "one size fits all" comment - what solution do you think is being recommended that is one size fits all?

Basically, leave him to it, don't help him financially, he needs to do it all himself. I don't like the idea of leaving this to a sink or swim task which if it fails and ends up beyond redemption and he is kicked out of his flat, his partner leaves him and he then moves back in with his mother, then has maintenance payments on 2 kids, loses his job and still has a pile of debts and clinical depression. That is a worst case outcome but even just one of those happening is not something I would want on my conscience. I am thinking of taking a middle of the road approach to this, so working with him to take ownership to sort it, while helping both with advice and if required funds to make it happen quickly. Yes, if the first part is great and I don't need to invest in this recovery then great but I also want this sorted ASAP.

   

lilmorph

Rob5342 said:

lilmorph said:

Rob5342 said:

Of course it's up to you what you do, we can only offer advice based on our own experience, but a lot of us have been through similar experiences.

I think you need to look at this long term. 6-10 years to pay the whole balance might be 4-6 years once he gets on a budget and has put money aside for settlement offers. That's not all that long if it gets him into habits that stop him getting into debt again for the next 30 years. Alternatively giving or lending him money now might mean he never learns those habits and ends up back in the same position in 10 years time.

That is my big concern about breaking the habits that got him there. The inability to get a new credit card or loans for a few years is obviously a help.

That's what really helped me. Once I started a DMP and stopped having access to credit then I absolutely had to stick to my budget and maintain an emergency fund as there was no fallback. It felt quite scary at first but has been hugely beneficial as I've now completely changed the way I manage things.

Be realistic about how quickly he'll be able to change his habits. I was serious about sorting things out.when I started a DMP and had a budget drawn up, but it was at least a year before I was properly in the new mindset.

Yes, the time taken for him to get in the right mindset is a worry but I think it has started. If he needs micro-managing to get there then so be it. I'm sure he'll hate me for it but the sooner he proves he is understanding the sooner he can get me off his back.