Daughter's bf in serious debt. Any advice please.

[tomal]

Dd's boyfriend (aged 20) has admitted today that he owes at leaset £9000 (I think it's a lot more). He has recently dropped out of university and hasn't been able to find a job yet. His debt consists of a personal loan of £7500, two overdrafts (approx £1000 each), a credit card (total amout he has not disclosed) and an hp agreement for a computer which is £79 per month. He is also two months behind with his rent for his student accommodation. Dd is shocked, but wants to help him sort out his problems.

He is refusing to tell his parents and we are not actually supposed to know, but Dd has told us, so we can give her ideas of what to do. I've suggested Citizen's Advice Bureau, but he is apparently not keen.

I think what I need are cold, hard facts about what may happen to him if he does not sort this out. Will he be taken to court? If he does will he get a "ccj"? What will this mean for his future credit rating? if she can persuade him to go to CAB, what can they do for him?

Thank you in advance for any advice. We need it!

try he won't be able to get a mortgage...or any more loans or credit cards! No interest free credit....

Particularly now in the current financial turmoil.

I don't think that not being able to get a mortgage will worry him. I'm presuming that the bank who gave him the personal loan and the hp company will take him to court at some point for non payment. He has no income at all at the moment, so these debts are going to continue to spiral.

tomal,

He needs to stop both the denial and burying his head in the sand and seek help for his debt. Otherwise within two to three years he could be potentially looking at a debt of two to three times the size it is now. The interest payments will make the amount owed skyrocket. You are indeed correct; doing nothing is the worst thing he can do.

This is his debt; it is his responsibility to pay it off. Do NOT "help" him by paying off his debt; encourage him to seek help NOW for his debt issues.

CAB may assist; there is also the CCCS - Consumer Credit Counselling Service (which is a charity specialising in debt issues). Actually I'd talk to the CCCS first off. He also needs to talk to these companies; they can be more amenable especially if they are appraoched early on.

He needs advice from the CAB.

Also this website might help him too - they have an excellent forum. Ignore all the other stuff there (lots of stuff about debt management plans and IVAs but they charge for their services) - just go straight to the forum. One or two regular contributers are very involved with the debt services - one is an Official Receiver who is very knowledgable about what debt collection agencies and creditors can and cannot do.

CCCS can also help - they are a charitable debt management company who don't charge any fees but will set up a debt management plan for him and liase with all his creditors. However, if he has no income but also no assets much of the advice is likely to be bankruptcy - wipes the slate clean and all that. This will mean he won't be able to get a mortgage - at least not in the short term but in 10 years time who knows. As an uncomplicated bankruptcy case he could be discharged in a year with a clean record. Eventually he'll be able to get credit (including a mortgage) again but not straight away (lets face it hardly anyone is getting mortgages at the moment).

Hope that helps.

citizens advice are brilliant at this sort of thing,

They really helped me sort out my debt when dh left.

With me they added up all my debt,

Then did a income and outcome report, they then work out whats left each month and offer each creditor a portion of that,

The other thing they managed to to was get all the creditors to freeze the interest and charges.

I've been on this plan for nearly 2 years and as long as you keep to payments, usually there is no problems.

The creditors seam to prefer you go through citizens advice, and they also so handle all the letters and calls on your behalf which makes things less stressfull.

Bankruptcy is not the norm in these circumstances unless the bf is never going to work in the future. CAB/CCCS would not advise that in these circumstances, though it is one of the options. But even if he hadn't dropped out of university, the average student does now leave uni with a considerable amount of debt - for a 20yo these figures are closer to the norm than you might think.

His priority will be the student accommodation assuming that he still lives there? Has he signed on yet? And if so he should also be applying for housing benefit, though depending on the exact nature of the accommodation he may have to move out and find something else.

Does he have any student loans in addition to the above?

If he is still living in the student accommodation then paying the rent is his priority (and he should be able to claim benefits in order to allow that to happen, though as a drop out there may be a period whee he is not able to claim)

For the other creditors then he would need to write to them explaining his circumstances. Until he ges a job then he is only in a position to make token payments (£1 to each of them). If he goes via CAB/CCCS then he is more likely to get his interest and charges frozen, so I can't recommend that route enough (though MBNA still generally don't freeze).

So long as the creditors see that he is keeping them informed, then in view of his age they are unlikely to take court action simply because if they do they won't get anything back - he would simply be declared bankrupt and they would get nothing. Given that he has at least 40 years of potential income ahead of him they will wait until he gets a job.

Google "Money advice trust" and cccs, as their sites have pleanty of info. The other issue will be the HP agreement - he is likely to lose the computer but it does depend ont he terms of the agreement.

There is also National Debtline, which are a charity, not a private company, they too give good advice and help.

Thank you for all your replies and advice. I've been at work all day and then swimming lessons.

He has got a student loan as well which is probably over £5000. he attended university all last year and for september and october this year. He won't need to start paying this back though until he earns over £15000?

He is refusing to speak to anyone. He's still hoping to find a job and then that will sort out all his problems. Dd is also reading this thread so hopefully she will have more information to try and persuade him with now.

Thank you for all your help.

he must go to CAB now! as others have said, the debt will just keep building up, he will get hassled by the creditors and it will be very stressful. CAB will help him by putting him on a payment plan so he can make a token payment until he finds a job.

I had a really good result by going through CAB (admittedly my debts were run up in different circumstances (mostly by ex) and I had a child to support.