Can I help my brother get out of debt using my good credit record?

Dizz

Hi everyone

Bit of a tricky one, this.

I've got an excellent credit record and never take any loans and I pay off my credit card bills each month - unless I have the money to pay for something I don't buy it. That is, apart from my mortgage - and I've just recently bought a house and do have a very big mortgage to pay all on my own.

My brother is in a £16k of credit card debt, he never managed to pay off his student debts and despite having a degree started out working in low paid jobs so his debts just spiralled.

Now he has a reasonably well paid job but it took him a while to get there and he is finding the interest repayments on these cards crippling and really needs to get a loan to pay these cards off - but has been refused on a couple of occasions as he has such high credit card debt and is not a homeowner.

He's asked me to borrow the money for him, and I have to say I would do almost anything to get him out of this because I know it has been getting him down and it makes me feel sick to the stomach that these credit card companies are making so much money out of him, and I do want to help - but I am frightened to take out such a huge loan in my name when I've already got a very big mortgage! He wants it over 5 years - he says as soon as he is creditworthy again he will take out a loan in his own name and repay it (including any early repayment penalty charges) so that I will be clear of it as soon as possible.

Just wondered if anyone has any other suggestions as to how I can help him? It seems to me that debt consolidation loans are a complete con and the interest rates are so high on them it's best if he doesn't get one of those...

Can we get a loan out in his name and I be his guarantor, for example? I know that he will repay it, we are very close and I know he wouldn't let me down.

Many thanks

Dizz

robotgirl_2

Just wanted to say that this is a lovely thing you'd do for him BUT please make sure you draw up a separate legal agreement between you with a solicitor outlining what would happen if he *did* miss any payments. You're close now, I know, but money can cause the biggest family fall-outs

tealady

How about getting him to put up his SOA on here. If he cant pay his cards how is he going to pay you, has he drawn up a budget. PLEASE consider carefully about GIVING someone this amount of money (yes I mean GIVE) as if he defaults that is what it will be, a gift for him and a millstone for you.
Sorry to sound harsh but you have to think how would you cope if the worst happened ie for some reason and for no fault of his own he couldnt pay you.

immoral_angeluk

I heard this from a very wise DFwer a few days ago...

'Only help him out with money you can afford to lose if he doesn't pay you back'.

hev_2

Has he borrowed money off you in the past? Like a tenner - something like that? What was his attitude to repaying that or repaying your mum or other relative if he borrowed money?

Thing is - only borrow what you can afford to repay if he doesn't pay you back. If it goes wrong, you don't lose your house. If he pays back then it shows he is working it out all right. Does he come on these boards? Has he had his light bulb moment?

Sorry if this is sounding harsh - sometimes you love your family so much it hurts and if you have a good brother who will keep up to things then it is a great way of helping him out.

You sound like a really nice person and your brother is lucky to have such a great sister.

GeorgeUK

As robotgirl said - you MUST have a written agreement with him. I loaned my brother a few thousand years ago and he has since tried saying that i actually owe him money for not paying rent (while he let out my room) when i was a student.

I'll never see the money again and i have distanced myself from my brother quite a bit. A bit sad really.

Getting a loan is one option, but if you have a good credit history, and depending on how much you earn, could you try a couple of 0% CCard deals? I would prefer this option so that you pay no interest at all, but you would need to replace the 0% card every year or so with a new one.

basketcase

Quote: "He wants it over 5 years - he says as soon as he is creditworthy again he will take out a loan in his own name and repay it (including any early repayment penalty charges) so that I will be clear of it as soon as possible."

People with MUCH more money sense than I have will probably be along to advise on the pros and cons. (Edit - in fact they have!) However one thing leaps out from what you've written:

Why is he planning take out a loan to repay you "when his credit rating improves"? Would it not be more logical, if you decide to go down this route, for him to give you the monthly repayment figure so that you can pay the lender? (Or at least most of it and then carry on paying you until the whole amount is cleared). After all, the credit 'nasties' will have gone, so he should at least be able to pay the amount to you that he would have paid to the credit card companies. It also means he'll be getting free of that huge debt - which HE'D STILL BE IN, except it'd be to YOU not the banks etc because, effectively, you'd be borrowing money to give him an interest-free loan. (What a great sibling, BTW! Though I do agree about the legal agreement - it stops family things getting messy later!))

I think that this is the reason that consolidation loans/overdraft extensions etc don't work for so many people (and in case I sound judgemental - which I'm not being - that would have included me prior to finding MSE! ) You tend to think "That's the debt gone. I've got all that credit freed up" and you haven't. That's fatal because the danger is that you run up the credit again and still have the loan etc

I don't mean anything bad about your brother and do sympathise with the mess he's in. However, if he could be directed to MSE, he'd be able to pick up a few tips on how to avoid getting into the same trouble again. Wish I'd found something like this years ago!

Dizz

Hi Basketcase

He is going to set up a standing order to go into my account every month to pay the loan... and then in a year's time or so (however long it takes to repair a credit score...) he will get a loan out himself and take the debt back in his own name.

I do have a couple of empty credit cards that are offering me 0% balance transfer deals for 6 months or so, but that would only clear about 7k of the debt, he would still be left with 9k. I suppose if I could take that 7k off him for 6 months that would help..

Really don't know what to do for the best, I am terrified of getting into debt but I know he can't go on like this.

(Land_of)_Maz

I think he (and you!) would be better if he came on here and got some advice, another 2 weeks trawling thru here might give him enough help to start getting himself out of this without you being involved.... (then you can reconsider the loan if you need to, 2 weeks won't make any difference but will help make a more informed choice)

The kindest thing you can do is support him in contacting his creditors, making letters from templates, sorting out freezes on interest whenever possible etc....

Get him to sign up to MSE, if he is serious and you are as close as you say he should take the advice. If he isn't willing to try and grab the bull by the horns then maybe he isn't such a good bet for lending the money to... he needs to show willing to help himself first. If he's willing to take your money, he should be willing to take your advice first and prove himself.

Do i sound harsh? I'm not, i'm not that kinda person, i just think if he has a decent income this place can help him, and stop this possible stress on your sibling relationship. You're obviously not keen on lending him the money, for all the right reasons so go with your gut instinct, and if he doesn't like it, and shows his displeasure, then you know you made the right choice, and if he's a good brother he will take the (not inconsiderable) help you and this site can offer him.

chevalier

Does he have sky, things like that that he is prepared to cut to help himself? Can he get a second job to repay the debt faster? What about selling things on ebay/amazon etc.

Whilst I understand that you want to help, I am not sure that bailing him out will do this in the long run. Surely it would be better for him to learn to budget NOW, rather than later, and cut his cloth accordingly.

Having said that the compromise would be to balance transfer some of the highest APR debt onto the credit cards. That way he would be paying less interest on some of the debt, which would mean that he could repay all of the debt faster.

I sympathise with your dilemma, but the easy way out (you getting the loan) may not be the best in the long run.
chev

joeblack066

Could he come live with you rent free for a while to throw his earning at the debt instead?