Step-Father needs help - advice?

[rob.m]

Hi

My step-father has got himself into a huge debt and has now realised he needs help.

He is 68 years old.

He has just started divorce proceedings against his wife - they haven't lived together for 25 years - and will get nothing out of the house (maybe £1000).

He has 4 credit cards and a bank overdraft which he has managed, so far, to pay (my mother has been paying most bills from her savings and only recently wondered where it all had gone and discovered the extent of his debts).

His pension income is £1000 pcm.

His debts are as follows :-

Barclays overdraft £1000
Barclays c/card £5,500
Lloyds c/card £4,000
Nat West c/card £6,000
TOTAL = £16,500

He has been paying the minimums due (I believe) of £480pcm.

Using a form we completed online for CCCS (he's not taken things further with them), his monthly expenses are as follows :-

Rent & Ground Rent £300
Food £200
Telephone £30
Utilities £40
Repairs £15
Hospital Fund £18
Car Insurance £25
Car Tax £14
Car Fuel £90
Car Repairs £10
Car Breakdown £8
Medicines £7
Dentist £13
Barbers £10
Clothing & Footwear £20
Hobbies £5
Sundries/Emergencies £5
TOTAL = £810

Available each month before debt payments = £180 approx

So, what options can anyone suggest please ?

Other questions are :-

1) how much would the IP charges be (approx) ?
2) if the IVA is rejected, who pays for the IP to date ?

Thanks
Rob

PS I hope I got all that correct now, and Im not sure if Ive missed anything.

[jue]

hi rob

IP's fees are usually between 6-8k im sure one the experts on this forum will clarify this.

my IVA was rejected on monday and i do not have to pay anything to my IP (i am with payplan)
hope this helps

jue.x

[zoe]

Hi there
Has your step father written to any of the creditors to ask them to freeze interest and accept lower payments? This may be an option?
Z
x

Zoe
x
Keep your chin up - everything happens for a reason!
View my blog http://zoes.blogs.iva.co.uk/

[rob.m]

Jue - thanks

Zoe - the "report" he had back from CCCS suggested a Debt Management Plan, which would mean the debt was spread over nearly 8 years (rather than 5 with IVA?) and there was (I believe?) no guarantee the creditors wouldn't later sue etc anyway.

Rob

[zoe]

No that is correct it is an informal arrangement with your creditors.
The other point is that he has only got 3 creditors and forgive me for saying this, (even though he will not feel it is the case) it is a realitively small amount of debt.
Has he tried to contact?


Zoe
x
Keep your chin up - everything happens for a reason!
View my blog http://zoes.blogs.iva.co.uk/

[jue]

correct me if im wrong anyone,but if CCCS advised that a DMP would only take 8 years to pay the full debt,then the creditors will probably prefer this as to going into an IVA.

jue.x

[rob.m]

Jue & Zoe

The CCCS "advice" was auto-generated after completing their on-line form.

Unfortunately, because that form printed the "results" and stated in black and white "your monthly payment will be £183" my step-father already believes he has been accepted - he hasn't done anything with the actual application forms they sent him.

That's why I'm trying to establish the best route for him as he is totally lost with any financial matters.

The IVA facts state you should have a minimum debt of £15,000 to at least 3 creditors - hence the enquiry.

Rob

[zoe]

Hi Rob
Yes that is correct but my personal opinion and i stress "personal" is that with IP fees added on of £6000 - £8000 the creditors may not like this as they feel not worth while when their whole debt could be cleared from a debt management plan. THis is just my thought though, i am sure one of the other experts will be about for advice soon.


Zoe
x
Keep your chin up - everything happens for a reason!
View my blog http://zoes.blogs.iva.co.uk/

[Adam Davies]

Hi
An IVA may not be suitable due to the fees and his creditors may prefer a DMP as the whole debt can be repaid in less than eight years if interest is frozen
He may be able to deal with his creditors direct as he only has three and they may agree to freeze interest and reduced payments
If an IVA provider does take his case on and it is not agreed at the creditors meeting then he will not have to pay anything as the IP will stand the costs
He can also consider bankruptcy as he has no assets
regards
Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[jue]

rob

yes that is correct,but sometimes creditors prefer you to do a DMP if it would take you 8 years or less to repay the full debt,this way they would get back all money what as been borrowed,where as in an IVA only part of the debt will be paid back because you have to pay IP fees

[rob.m]

Thanks for the advice, so far !!

I must admit to finding it rather strange.

It would seem that he can have a debt of £16k and pay £180 per month for 7yrs 6 months.

OR

He can get himself into (let's say) a further £10k of debt and end up paying the same £180 per month for just 5 years ?

It's not exactly encouraging someone to be responsible is it? I'm not having a go but just curious.

Cheers
Rob

[jue]

rob

what do you mean when you say "he can get himself into a further 10k in debt?

[mick.i]

Rob,
Can I ask why your step father needs to pay £10 per month at the Barbers?
Surely he could buy a pair of clippers for £15 and cut his own hair.
I would consider a trip to the Barbers as a luxury and is hardly fair on his creditors....

[rob.m]

Hi Jue

I probably shouldn't take this any further as I run the risk of not getting any help for the original situation, but...

What I was trying to convey is that (according to the replies so far) he would be more likely to qualify for an IVA if he was £26k in debt as opposed to just £16k - and he would be debt-free nearly 3yrs earlier than with the smaller debt.

Rob

[MelanieGiles]

Hi rob

I am assuming that the property you refer to is jointly owned with his first wife? Is this correct? Is there any equity at all in the property, and if so how have you calculated the £1,000. It may be that your step-father is entitled to a larger share of the equity, and a Trustee in bankruptcy would certainly look into this. Does your step-father have any other assets which would be captured under bankruptcy proceedings? If not, and given his age and reliance upon pension income alone, he ought to give serious consideration to this as an option towards debt freedom.

Turning to the possibility of an IVA, your step-father is a perfect candiate for a SIVA - but he is about nine months too early. SIVAs stand for Simple Individual Voluntary Arrangements, and are going to be introduced in April 2008 (we hope!). These will be far simpler, and therefore cheaper, and this ought to bring down the minimum monthly contribtion levels operated by most insolvency practitioners of between £200 and £300. My own view is that these will be done for monthly contributions of at least £150, and IP fees of approximately £3,000 over a five year period. If he is desperately adverse to bankruptcy proceedings, it may be worth entering into a DMP now and reconsidering when this newly introduced legislation is anticipated to become available.

Hope this helps!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk