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Debt Problem - Mrs Christine Clarke 2010-07-26 16:25:10
 
I am experiencing some debt problems.

Basically what has happened is my husband went on sick pay in February and has been unable to go back to work as yet. As he only gets basic sick pay you can imagine how we have struggled so far as our income has dropped dramatically. I have been able to keep afloat so far but with credit cards, which on hindsight was the wrong road to choose, in the hope that he would be going back to work, so our situation has worsened. The situation at the moment is that I work full time and my monthly salary is not covering all our outgoings. I can give you a list of all our debts but briefly we are behind with three credit cards (2 months), virgin media (2 months), sky (2 months), bank loan (one month), three catalogues (one month) and our overdraft is at its limit. Our mortgage, thankfully, is being covered by my salary as the direct debit comes out of our bank on the day I am paid.

We have sickness insurance to cover some of the mortgage payments but I am not sure whether we will be covered as my husband's reason for being on sick leave is for pain from an old fracture after falling again earlier this year, and unfortunately there is an exclusion on any problems arising from this. We also have overdraft cover and have started a claim for this also but are waiting for the forms to be completed by his employer and our doctor, who is of course making a charge of £45 (mortgage claim and overdraft claim) which we will have to find.

Will you be able to help / advise me of the right way to handle our situation.

Replies
    
Re:Debt Problem - simon wiggins 2010-07-27 10:41:03
 
Hello Christine. I am very sorry to hear about your situation and will of course do my best to advise you. However you are going to have to realise this will take drastic steps on your behalf which you may not have wished to take in an ideal world but they are necessary to give you back control of both your finances and the overall situation.

First off and the most immediate step needed to get an alternative basic bank account up and running with a provider to whom you do not owe any money and I do mean basic!!! Any other account will be credit checked and you may not get it given your defaults. Once you have the account open contact all the people to whom you have regular payments not debts so I am talking about your essential outgoings here not credit or store cards or loans etc and tell them you have changed banks, not to apply for any further payments from your old provider and to then set up the regular payments from the new account. This is first step or no one can help you there is no nice way to shaft your old bank so to speak so you cant let him or her know about any of this. The first they will know is when your pay and or other income do not arrive in the account when it should. If your mortgage is with that company ring the lender, and ask for a paying in book once you know that your income is defiantly going to the new account. Only once this is all set up can you write to the old provider saying that you are experiencing financial difficulty, to cancel any and all DD’s and STO’s and that you are seeking advice about how best to deal with your unpaid debts including any outstanding overdraft.

Once the above has been completed you will then have financial control back and it will be possible to see having paid all of your essential costs just how much surplus you actually have available to repay your debts. If you don’t act the banks all have what’s known as the right of set off which means at any time without notice to you if they think their debts are at risk they can freeze your account and take the contents to offset against what you owe them. This can occur at any time but most usually on the day your paid and so would leave you with no money at all at that point so opening a new account and moving your income away from their control is the crucial first step Also no on who is helping can negotiate with your creditors while your income is still under their control. Your overdraft is just as much an unsecured debt as a credit card or loan is and must be dealt with in the same way as all of your other debts but cant be while your pay is going into the account.

Then you need to consider the various debt solutions available in the UK to deal with your situation. I will send you a fact sheet via e-mail on all of them rather than write a huge response explaining each in depth. I suspect that either free debt management plan via one of the UK free providers such as Pay Plan 0800716239 or an individual voluntary arrangements (PP also do these) is likely to be the solution best suited to your situation but we wont know that until your financial statement has been completed once you’ve moved banks. You can obtain help with drafting this either by ringing Pay Plan, contacting national debt line on 08088084000 or vesting your local CAB or similar and speaking with their money adviser or debt case worker However before any of this can begin you need to get the alternative account up and running and redirect your income to it as outlined above.

I hope this at least starts you on the right path and there is a way out of this mess so don’t worry unduly but moving banks is first step. If you need any further advice along the way you are of course welcome to come back to me again but as soon as these arrangements are in place the sooner you talk to one of the sources mentioned the better to get the ball rolling on the solution that best suits your situation. Good luck and best wishes

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