Drowning in (son's) debt - getting desperate

devondiver

My wife and I are well into our 70s and just about getting by on state pensions plus a little on the side here and there. We have a cushion of about 50k in private pension and ISAs which we are trying hard not to touch, but little else in reserve.

Our 45-year-old son split from his wife several years ago and now shares care of their two children both in early teens. The split included a clean break settlement which gave her half the house equity with help from a 30k interest free loan from my brother and credit card 0% money transfer offers from myself. With this help our son was able to hang on to the family home but recent mortgage increases have made this increasingly challenging. He currently has about 150k equity in a rather run-down house and about 200k mortgage outstanding.

Of his take home pay of 3.2k/m he is left with 2k after mortgage, for everything else. He lives frugally but is inevitably short every month and has for years turned to credit cards and overdraft to make up the difference - with commensurate extortionate interest charges. Inevitably, every 2 years or so he reaches a debt ceiling of several thousand pounds which, on three occasions so far, I have managed to clear using 0% balance/money transfer offers (which are not available to him on account of his poor credit record).

In the past my son has given me regular repayments of 4 or 500pm (to cover my/his balance transfer repayments) but the gradual reduction in the total amount owing then gets reversed when I periodically have to clear his own credit card and overdraft debts. The result is that over the last 6 years or so his debt to me (all represented by regularly recycled 0% credit card deals) has not fallen below about 16k and now, with rising prices and mortgage costs, stands at 21k.

In addition my son has recently revealed to us that he is now sitting on a further 12.5k in overdraft and credit card debt which is costing him nearly 300pm in interest alone. And, of course, he has reached the ceiling again and the only way forward we can see is for us to borrow more on his account – which we are now finding really worrying because of its obvious unsustainably.

So the thing that we have battled to avoid for the past few years i.e. our son losing his family home, now looks like becoming a reality. The problem is, as exemplified by the situation of my son’s ex-wife who rents a cramped flat nearby, that rental costs in their area (Surrey) significantly exceed my son’s current mortgage costs. So if he sells, the equity remaining after settling loans/debts etc., would probably be gone in a relatively short time - and he’d be back to square one - but with no house.

Although I consider myself slightly money-savvy (a can use spreadsheets etc.) I feel my son is sadly lacking in financial management and organisation skills. Despite my nagging I cannot ever see him getting down to sorting things out with creditors and debt management advisors – so it is left to me to find a way forward. So far I have suggested to him that he contacts his creditors with a plea to stop interest payments (Halifax charging 49.9%!!) and agree an affordable repayment plan whilst I try to get more on 0% deals for immediate needs – but I fear I am rapidly losing hope of us avoiding being dragged under with him. So desperate for a coherent plan.

Thanks for reading – and any guidance on possible ways forward will be most gratefully received. (Any chance of getting bank and CC companies to refund some of the crippling interest they have bled from him over recent years?)

DD

Keep_pedalling

It does not sound like he is living that frugally, where is the £2k per month going?

elsien

Your son never going to sort out his issues if you keep bailing him out every time. He has no incentive to manage because you are Plan B.
Do not borrow any more money in your name to give to him because you won’t get it back and you will be liable for the payments. And he will carry on running up more debts and ending up in exactly the same position with even more lending because that’s the pattern up until now. 

Losing his home may not be inevitable, if he gets his act together. He can come on here and post an SOA for advice. He can go to Stepchange or one of the other charities and get their advice. But it is not down to you to sort out a plan for him. He is never going to take responsibility while you are doing it.

2K month after he has paid his mortgage is a fair amount of money to be going on with so I would also query (debts aside) how frugally he is actually living in practice. I suspect he’s not being entirely honest with you on that front.

Hard though it is when it is your child, you have to stand back and let him get on with it. He’s an adult and a parent. You are not going to be around forever. You will be doing him a favour in the long run by making him sort this out for himself. 

Floss

He needs to own this situation and his current financial position, and you need to shut down access to the Bank of Mum & Dad.

Until he takes control himself, things will never improve.

If he is spending £1,200 on mortgage repayments & £300 on credit cards, where is the other £1,700 going if he is living "frugally"? He obviously isn't living frugally if he is still increasing his credit card debt.

And he needs to prioritise repaying you - even if he releases some of that £150k equity to do so.

JadedAngel88

The balance transfers, are the cards in his name or yours. 

I fear that you have taken these cards in your name and if he doesn't pay you will be liable. 

tacpot12

You have done a great deal to help your son, but I think have reached the point where if you do more, you will go down with him. That is not fair on your or your wife.

Selling his house and moving in with you might be an option, but realistically you don't want his debts connected to your address. You have already found that nagging him to sort things out doesn't work. You don't need the hassle of having someone who cannot be influenced to do the right thing in your own home. 

I would recommend standing back from the situation and seeing what happens. You are clearly very uncomfortable with debt, but he isn't. He has been happy to borrow from all sorts of lenders including yourself, and has been happy to pay them back when he is able to do so. 

There is no chance that money he has already repaid would be given back to him. The best he can hope for, if he can negotiate it, is that some of what he still owes will be written off. But he needs to negotiate that with the lenders. You can't act for him, and even trying to do so, gives him a reason to ignore the problem. 

Grumpelstiltskin

Debts  are not connected to an address, so if he did move in with you it would not affect you, but it is time to say no more, he will bleed you dry if you let him so say no more you have to sort it out yourself.

foxgloves

Hello.DD,
This might sound harsh, but the time has now come for you to stop bailing out your son & I suspect you know this. He is an adult, he has a reasonable income but has probably becone dependent on you bailing him out financially, so has little impetus to change. Of course, I can understand you wanting to help him, but you need your retirement money for its intended purpose, not settling repeated debt for somebody who doesn't seem to be learning from the experience. Your son needs to learn how to budget & to address his clearly entrenched debt problem via the standard routes. My knowledge of these is nowhere near as comprehensive as some of the people who regularly post on here, largely because I 'caught' our debt before it got away from us & was thankfully, at £35k, still at an amount we were able to pay back through lifestyle changes & learning how to budget & live within our means.
One thing I will add is that this didn't happen until I was in my early 40s. I too received fairly regular 'bail-outs' from my parents & although I was very grateful to them at the time, with hindsight, I can see that this facilitated the continuation of my lack of budgeting. Without their very kind & well-intentioned help, I'd have been been forced to take control a lot earlier than I did, & it may well be a similar case with your son.
I do understand that the separation/divorce process can be costly, but you say that this was several years ago, so his financial problems would now appear to be more a result of poor management & overspending. Please stop funding this while you still have money left for your retirement.
Best wishes,
F

fatbelly

Look, debts in his name are his debts and he has 150k equity to access. He can do this voluntarily or, if he continues to fail to pay the mortgage, the matter will be taken out of his hands.

Meanwhile it sounds like you have a load of debts in your name as a result of 'helping' him.

If you want to list your debts, which would be a good exercise for you, we will help you to get debt free

devondiver

Hi Kp - Briefly:
Bank and CC minimums: 371 (of which 289 is interest alone)
Children: 450 (paid to mum as per CSA dictat)
Council tax: 245 (plus 286.50 last month to debt collector)
Vehicle tax/ins/fuel/RAC: 260 (commutes on motorcycle, car used occasionally but needed for kids)
Household power/internet/mobile/water/insurance/etc: 393 (working on getting this halved)
CC payments held by me: 500 (I have been paying this lately)
Totals 2,219 before any food, sundries, car repairs or anything else.

Thanks, DD

stymied

It sounds like he may need to open a basic bank account separate to the banks that own his debts inc the overdraft, then stop paying the unsecured debt. Once it has defaulted the interest and charges will stop and he can start digging himself out of the hole. If he continues to pay his mortgage / secured debt then his house should be safe. Has he been paying your brother back too?