Family member debt

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My mum has got herself in hideous financial troubles and I'm trying to sort it out as she has her head firmly stuff in the sand. The only way out that I can see is to sell her house which is hardly worth anything, but it will pay off remaining mortgage and accumulated debt. The problem is, where will she live once this is done? Her incomings are only £800 a month. Her mortgage payment is only £200 a month, but to rent the smallest place I can find is £400 and there is no way she can afford that. I'm stressed to death trying to think of a solution, can anyone please help?

Your first port of call is to talk to one of the or a couple of the debt charities. They will be able to go through her in comings and out goings and help her decide on a solution.

National Debtline click here

Step Change
click here

They will not charge for their service and their advice is impartial.

Thank you x I'm just so worried about where she can live

Is there any way she can increase her income? Is she receiving all benefits she is eligible for?

How much debt does she have? Is it secured or unsecured debt? I don't think selling her home would be the first option until people will suggest until we know a little more.

Just to say, I know exactly how you feel as my mother is in the exact same boat, albeit with some financial/emotional abuse from my father. I've given her 5k this year towards her debts, but there's only so much I can give. I appreciate how much stress this puts you on your mother, it's great you're trying to support her

Thank you again I'll post the details tomorrow

How much debt?

Also buy her an alvin hall money book. It will help her change her habits

What has she spent the cash on?

Going through the same thing with my mother. Can she extend the term of the mortgage? Does she have space for a lodger?

Good luck. I've had to take over her finances completely to the extent of confiscating her debit card but she's spent thousands and can't explain how.

Similar has recently happened to me. Firstly go through all the debts and ensure that the payments are being made with the highest interest receiving the most money. Write to each vendor and ask them to freeze the interest whilst she pays this off. I would strongly advise not going for a debt mgmt plan, unless it is from a nfprofit org like CAB or step change. It is best to keep debts separate as this creates more flexibility. Is there any way she could move in with you and rent her house out whilst she resolves this? I would also suggest approaching some free counselling services, she needs help to understand why she has got herself into this mess.

With CC debts, when your back is against the wall, it is always worth challenging the CC companies right to claim the debt is still enforceable. Companies like Morgan Stanley Dean Witter had credit cards, which were bought out/became Goldfish cards, which then were bough by Barclays. Only Barclays don't have the original contract signed between the credit card issuer and the client, so all MSDW debtors who bow have BarclayCards have debts that are totally unenforceable under UK law. No contract document exists and those borrowers now only repay their debt through choice, not legal obligation.

Money Saving Expert is a good place to start looking into debt, as is National Debtline and the CAB.

National Debtline will talk on the phone and give advice anonymously if you want, taking notes and giving you a reference number if you want to continue to talk, without taking your details. At least they did when I needed them.

I'll play devil's advocate here.

WHY?

If she refuses to live within her means you cannot force her.

If she has a house costing only £200 a month you are mad to make her move.

You cannot inherit her debts.

If you sort her out, she'll just do it again.

Sounds like it would be cheaper to stay where she is and to play the debts back slowly?

If her mortgage is that small and the debt is unsecured she shouldn't sell. Stay put, contact debt charities and go from there. Work out a revised budget and if necessary take her cards (if she agrees and wants help obviously) and give her an allocated amount of cash each week. Sounds drastic but if you really want to help her and she wants help it could work.

Ultimately though she has to help herself.

OP check out www.turn2us.org.uk/benefits_search.aspx?gclid=CJnb3ffmscICFdQZtAodLB0AAA and make sure your mum is getting anything she is entitled to.

Then go to StepChange www.stepchange.org/?WT.srch=1&WT.mc_id=200012&WT.seg_1=stepchange&gclid=CIqM0ZLnscICFXQatAodJCoA8g Phone them with mum and they will help you both work out a plan.

Selling the house probably isn't the best idea.

You can probably get all unsecured debt repayments down to as little as #5.00/month. Speak to the companies concerned, they will agree a reduced payment for an agreed term. At some point in this period, the company is likely pass responsibility for the collection of the debt on to another company - debt collection company. They should be OK with accepting small payments on a monthly basis. All she loses is access to credit. Don't sell the house.