SOA: Are there any options?

s0127786

Dear All,

This isn't for me personally but for a very close friend who has asked me to look over her financial situation for her which she has neglected over the last 3 years, her current SOA is below:

(All income/outgoings have been worked out on a weekly basis)

Income:

Work - 22 hours per week (variable) - £110
Other - family donation - £50
Board money from daughter - £20

£180 per week

Outgoings:

Rent: £62
Council Tax: £20
Food: £40
Phone: £7.50
Mobile: £5.00
Electricity: £20.00

£155 per week

Debts:

Loan: £1400
Catalogue: £200
CC 1: £1744 (defaulted and passed to debt collectors)
CC 2: £ 964 (defaulted and passed to debt collectors)
CC 3: £ 663 (defaulted and passed to debt collectors)
T-Mobile £ 21 (old contract account)

Total: £4992

By my reckoning she is already very close to the margins with no safety net to speak of but best case she has £25 per week to pay off her debts.

If we can assume that her creditors could be convinced to freeze interest it would take 4 years to pay off the debts assuming her financial situation doesn't change.

Extra hours at work aren't possible, if anything they're likely to be cut, and as she works in the Bar trade it's very difficult to supplement already anti-social hours, I feel that although she could commit to £25 per week that leaves her incredibly vulnerable to financial shocks such as recession, unemployment or illness.

She has no assets to speak of - literally clothes and her home furnishings so my immediate advice was bankruptcy.

However, she feels this is the "easy" option and doesn't want her name in the paper. I guess the next option up would be an IVA but with that little disposable income is this a realistic goal?

Any suggestions?

Thanks in advance!

skint_spice

Could she maybe get another F/T job elsewhere? she could cut the food a wee bit but not much room for cuts really. extra room - lodger maybe? or sell some stuff on ebay?

splishsplash

If she's working 22 hours/week, that should leave plenty of time to work at another job. 22 hours is just a few hours each day, as it's bar-work and anti-social, I presume it's evening/night? She could get a part-time or full-time day job, and still keep the barwork.

Does she not qualify for benefits of any kind? It might be worth checking - her income seems very low.

s0127786

The Bar work is variable and her shifts vary every week which is why it's so hard to fit anything else in since she doesn't know her hours until (sometimes) a day before.

Additionally, she has very little from a skills point of view and her employment prospects in her town are very poor.

Ebay would be an idea but i'm really not kidding when I say she has no assets - she could probably sell all of her possessions for < £1000.

The lodger advice is a good suggestion but I think she might hate that idea more than bankruptcy!

GeorgeUK

£80 pm for electricity is quite high. Have a look at uswitch or moneysupermarket for a better deal.

If the cards are now with the debt collectors, has she requested a copy of the credit agreement, notice of assignment and statement of accounts?

What are the APR's for the loan and catalogue?

Has she been making payments towards all the debts that are with DCA's?

s0127786

She's requested a copy of the agreements but they havent arrived yet - Would I be right in saying that if they can't be provided then the debt can't be enforced?

The loan (I dont know exactly the APR) but its a 900 loan which (with interest) is 1400 total which she pays off at 30 a week for (I think) 38 weeks.

The catalogue is interest free.

She's made no payments whatsoever for 3 years.

GeorgeUK

If she requested a copy of the CCA with the £1 payment, then they have 12(+2) working days to supply the document. If they fail to do so then the debt is unenforcable (without a court order) and no payments need be made. If no payments have been made after 6 years (5 in Scotland) and no letter has been sent acknowledging the debt, then the debt becomes statute barred.

If she is paying the council tax over 10 months, can she ask to pay it over 12?

s0127786

Ok, I didnt realise that about 5 years.

It seems to me that she should not formally acknowledge the debt for another 18 months, its the defaults on the cards that are the issues - she's more comfortable with the loan in general.