Make Sense of Cards - Worried Dad

09. Sep 2010 at 14:54

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Worried Dad (Read 573 times)

DAD

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Worried Dad
11. Jan 2009 at 19:06

My son is in debt difficulty see SoA below - I have offered to pay off the arrears for Gas - Council Tax and Water which should reduce is monthly payments by £150 (Council Tax) and he will move to alternative rented accommodation costing £300 mth inclusive of all bills saving £200 Total saving £350 and no ongoing bills other than his card debt and an agreed amount he will have to pay me - to be decided.
Is this the best way forward before tackling his Card debts any advice welcome

Statement of Affairs and Personal Balance Sheet Household Information Number of adults in household........... 1 Number of children in household......... Number of cars owned.................... Monthly Income Details Monthly income after tax................ 1300 Partners monthly income after tax....... 0 Benefits................................ 0 Other income............................ 0 Total monthly income.................... 1300 Monthly Expense Details Mortgage................................ 0 Secured loan repayments................. 0 Rent.................................... 500 Management charge (leasehold property).. 0 Council tax............................. 90 Electricity............................. 45 Gas..................................... 45 Oil..................................... 0 Water rates............................. 20 Telephone (land line)................... 0 Mobile phone............................ 0 TV Licence.............................. 0 Satellite/Cable TV...................... 0 Internet Services....................... 0 Groceries etc. ......................... 75 Clothing................................ 10 Petrol/diesel........................... 0 Road tax................................ 0 Car Insurance........................... 0 Car maintenance (including MOT)......... 0 Car parking............................. 0 Other travel............................ 30 Childcare/nursery....................... 0 Other child related expenses............ 0 Medical (prescriptions, dentist etc).... 0 Pet insurance/vet bills................. 0 Buildings insurance..................... 0 Contents insurance...................... 0 Life assurance ......................... 0 Other insurance......................... 0 Presents (birthday, christmas etc)...... 10 Haircuts................................ 0 Entertainment........................... 75 Holiday................................. 0 Emergency fund.......................... 0 Total monthly expenses.................. 900 Assets Cash.................................... 0 House value (Gross)..................... 0 Shares and bonds........................ 0 Car(s).................................. 0 Other assets............................ 0 Total Assets............................ 0 No Secured Debt Unsecured Debts Description....................Debt......Monthly...APR Barclaycard....................1825......56........16 Cap1...........................1000......40........16 Vanquis........................500.......20........16 Water..........................300.......0.........0 Council Tax....................800.......150.......0 Gas / Electric.................1600......0.........0 Welcome finance...............4000......315.......26 Total unsecured debts..........10025.....581.......- Monthly Budget Summary Total monthly income.................... 1,300 Expenses (including secured debts)...... 900 Available for debt repayments........... 400 Monthly UNsecured debt repayments....... 581 Amount short for making debt repayments. -181 Personal Balance Sheet Summary Total assets (things you own)........... 0 Total Secured debt...................... -0 Total Unsecured debt.................... -10,025 Net Assets.............................. -10,025

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manz

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Re: Worried Dad
Reply #1 - 12. Jan 2009 at 08:20

It would be a sensible plan IF the SoA is accurate.

Does he really spend that little on Groceries? It has to include all food, eg lunches at work - does he take sandwiches? Also toiletries - soap, shampoo, shaving stuff etc And sundries - things like stamps, lightbulbs etc

He should budget for £10 a month for medical (one chipped tooth and his SoA is wrecked). Also £20 a month for emergencies.

He really needs to keep a spending diary so that he KNOWS where the money goes.

And you should suggest that he has a few months on a reduced Entertainment budget so that he can really start to clear the balance on that Welcome card.

Has he cut up the credit cards?

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Sonic

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Re: Worried Dad
Reply #2 - 12. Jan 2009 at 10:27

Hi Manz is right, how can he be feeding himself on less than £2.50 a day, it doesn't make sense.

He doesn't owe enough to declare bankrupt and an IVA isnt really appropriate. What he really needs to do is to do a proper budget and get himself into a debt management plan. He can do this himself if he has the time and patience, or he can enlist the help of one of the free debt management companies, CCCS or Payplan.

He's not looking at a major crises here, he just needs a bit of direction, so I hope you are not a 'too worried dad'

Cheers - Col

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Stooz

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Re: Worried Dad
Reply #3 - 12. Jan 2009 at 18:18

Yes, just as important as paying the debts is ensuring the reasons the debt built up are understood. The aim being to ensure they don't continue to come back and the reasons why not to take out the loans are understood.

The welcome finance is the one to hit based on the APR, but I suspect that is a loan that you can't overpay? if so see if there are any costs for paying off early, if not (or they are low) apply for a loan at a lower apr, and switch it. that will potentially lower the payments and the total amount to pay it off.

loans to pay off credit cards are often frowned upon, but (i maybe wrong) its more because the risk of taking more credit again or re-spending on the cards puts you back at square one (as per the first sentence I wrote). But as you are helping deal with it, you can possibly take control of the physical cards and have a more day to day involvement.

If you can switch the cards to loans, the monthly outgoings will reduce, and a fixed end date will be in sight. The apr will be lower and the total cost will be less. Check these figures on the calculators on this site, and those that often come with the lenders websites. dont be afraid to run as many combinations as you need to ensure its what works best before applying.

Its harsh, but I would'nt recommend getting better deals by using your own name or securities. Your son needs to own the responsibilities.

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DAD

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Re: Worried Dad
Reply #4 - 12. Jan 2009 at 21:39

Many thanks I will revise his SoA and repost if thats OK.
Yes I have taken his cards and will cut them up - i note from the files he brought over tonight that he was / is thinking of signing with Debt Line ( he has approval to take on the loans paying them £150 month - but not sure what info he has given them to base this on)
I have taken the forms off him for now until he can give me details of what the £150 covers and hopefully any advice as to wether this is a good a or bad move re debt Line. Kids hey
Slightly less worried Dad

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clariman

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Re: Worried Dad
Reply #5 - 12. Jan 2009 at 22:45

Hi Dad (sound funny writing that) ...

Who is he considering signing up with? If it is a debt management company then I'd urge him not to sign up with them. Debt management companies charge for their service - money that could have otherwise been used to reduce his debts. They don't do anything that he/you can't do on your own.

If he wants additional help then there are FREE debt CHARITIES who can help like CCCS, National Debtline etc.

Clariman

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DAD

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Re: Worried Dad
Reply #6 - 12. Jan 2009 at 23:06

Hi Son ! Seriously I am so grateful never having been in such a position myself I didn't think I had any one to help.
It's a firm called Debt Line (not National Debtline) Reading through his papers (such as they are) there is a £30 management fee included in the proposed £150 repayment - I will check the ones you quote

(Why am I doing this ! to be fair he's out sorting alternative Rented accommodation £300 including all bills - moving back with us is a cheaper but LAST resort)

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clariman

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Re: Worried Dad
Reply #7 - 12. Jan 2009 at 23:12

You can find links to the debt charities from our Debt Guide her ehttp://www.makesenseofcards.com/g_debt.html

The debt management company that your son is considering using is takint £30 out of the £150 payment he is making - that means 20% of his available money is going to reducing his debts. It would be far better throwing the whole £150 at the debt rather than £120 and doing it yourselves or with the help of folk on forums like this one or with the help of a debt charity.

Good luck
Clariman

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