Daughters Debt

Egyptiandave

My daughter has managed to rake up £20k of credit cards plus debt.  She also has a loan.  Still waiting to find out for how much.

two years ago I went on her mortgage as a guarantor as she had split from her husband.  This was before she got into money issues.

she was claiming benefits as a single mum with two children.  She has since met someone else who has to children and moved him in.  So benefits stopped.

since then her outgoings has been more than her income and she has been using credit cards to top up unbeknown to me.

she will have to remortgage in three years as I only agreed to go on the mortgage for five years.

partner contributes but still not enough to cover bills etc.

we have been talking about a voluntary agreement, but not sure how it works and if she will loose the house.  In addition how will this affect me as I am on the mortgage?

Mortgage is paid every month so no arrears  credit cards minimum payments made so no missed payments yet.

trying to work out best course of action for her as I do not have the funds to help her out.

any help greatly appreciated.

fatbelly

Credit cards are nonpriority debt and 20k is not a lot

Do not go near an IVA unless you fully understand them and not for 20k. This is formal insolvency , which you do not need.

Most people deal with small debts using a debt management plan.

Maybe get her to post on debt-free wannabe

400ixl

You say partner contributes, but not enough to cover bills. Does that mean that he contributes all he can, or that he is keeping money aside for himself?

If the latter then there needs to be a frank and honest conversation. If the former and between them they have more outgoings than incoming then they need to look at if they can budget down the other way and to look at what other help may be available to them.

Getting your daughter to post on the debt free wannabe section herself with a full statement of Affairs (SOA) for both incomes and outgoings and the experts will be able to help advise her directly.

retiredbanker1

OP I would be amazed if the lender agreed to you been a guarantor but only for 5 years. If you have this in writing - fine but if not you will be responsible to pay arrears until either the mortgage is paid off or the loan has been moved to another lender.

I hope you took legal advice before signing the guarantee.

sourcrates

Moved to DFW.

Egyptiandave

400ixl said:

You say partner contributes, but not enough to cover bills. Does that mean that he contributes all he can, or that he is keeping money aside for himself?

If the latter then there needs to be a frank and honest conversation. If the former and between them they have more outgoings than incoming then they need to look at if they can budget down the other way and to look at what other help may be available to them.

Getting your daughter to post on the debt free wannabe section herself with a full statement of Affairs (SOA) for both incomes and outgoings and the experts will be able to help advise her directly.

partner pays what he can so no issues there.  Regarding a payment plan, if she defaults on her debt I assume this will have an effect when her fixed term mortgage ends in two years.

i will ask her to post her own thread so she can add more detail.

Grumpelstiltskin

IF they remortgage with the same provider there is no problem, no credit check.

Egyptiandave

retiredbanker1 said:

OP I would be amazed if the lender agreed to you been a guarantor but only for 5 years. If you have this in writing - fine but if not you will be responsible to pay arrears until either the mortgage is paid off or the loan has been moved to another lender.

I hope you took legal advice before signing the guarantee.

Thanks for the info.  Yes I took legal advice, the lender insisted on me doing that before taking me on.  Regarding the five years miss communication on my part.  I agreed with daughter to go on for five years after which her fixed term comes to an end.  At this point when looking to sort out a new deal the plan was for her new partner to take on the mortgage with her and remove me.  This was done to give her some breathing space after a messy divorce and to help her get her finances straight.  

Looking at where she is now I may be on for longer than anticipated, which may be a problem as I am four years away from retirement.  So not sure how the lender will view that.

Grumpelstiltskin

'Looking at where she is now I may be on for longer than anticipated, which may be a problem as I am four years away from retirement.  So not sure how the lender will view that.'

Don't worry about that at the moment, no one knows where they will be or what will happen in 4 years.

The sooner your daughter posts on here herself the sooner we can begin giving her advice.

EssexHebridean

The main question is whether your daughter herself wants to sort out the issues she has with debt - both the debt itself and tackling the cause of it. We have a saying on here “you can’t have a lightbulb moment for someone else” - meaning that the only person who can sort out their own issues with the debt is the person themselves. Don’t under any circumstances be tempted to give her money to clear anything - no matter how it might feel that’s a good thing to do, it won’t be, as it doesn’t tackle the cause of it, which sounds like it is probably overspending as a result of not readjusting budgets when income has changed. 

One thing she should check is whether in fact there is still some benefits she ought to be in receipt of in spite of her partner now living with her. If not, unfortunately if the household income is insufficient to cover their desired lifestyle then they either need to alter the lifestyle or increase the income!