My best friend had just told me she's in ВЈ6500 in debt...?

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Jennifer S

My best friend had just told me she's in ВЈ6500 in debt...?

I really want to help her but don't know where to start. She works full time, 55 hours a week bringing in ВЈ1460 a month. Her out goings are around ВЈ2278 a month. What she does is keep using what she pays from one credit card to pay another so she is stuck in a cycle. Her debts are from five credit card card, two store cards and 4 catalogues.

The debts have been accumulated over 3 years and she always misses payments from some companies because she doesn't earn enough to pay them all. So her credit rating is poor. If I had the money I would help her but I don't.

She is getting really depressed and i'm extremely worried for her!

Is there any genuine companies or places she could go to or ring up for advice? Or what advice can you give?

Thanks

Charlene

Contact the Citizens Advice Bureau - they have people that help with debt advice. DO NOT go to the companies on telly cos they will rip her off.

jelly bean

She needs to stop using all cards.
She needs to avoid a consoldation loan !!
She needs to contact the Citizens Advice who will help her reach an agreement with the loan companies on an achieveable repayment plan.
Try and avoid going bankrupt !!.

K-Lizard

As lots of other people have said, tell her to make an appointment with the Citizens Advice Bureau. You can find details through their website and most offices hold special money advice sessions where you can drop in or make appointments specifically for debt troubles.

They are really good at dealing with creditors, they can get interest stopped on any that she may be paying interest on, can prioritise her debts and can negotiate payment schemes offering each of them an amount that she can afford to pay, however little it is. Creditors tend to accept the amounts they are offered when CAB are involved because they know that that will be the most they can afford and they can either take it or leave.

I hope things work out for her soon.

Kevin N

Go to the Citizens Advice bureau. there is a way of getting companies to write off interest or part of the debt but I can't remember how. I went there and they put me touch with an agency that did this

Penfold

Speak to the Citizens Advice Bureau

Ariana

If you really want to help her tell her honestly that she needs to stop spending. If she got in touch with the catalogues they would reduce her payments . Even the store cards will help her. Her credit cards must still be in credit but she still should get in touch with them and be honest about her situation. Companies would rather find out sooner than later if there is a problem.

red lady-bird

Her best bet would be to get a loan with a low interest rate. She must pay of her c/c etc. with the loan. She would then have one monthly payment to make. Once the cards etc. are paid she must be strong and not use them again. She must close all the accounts and only buy things when she can pay up front. ВЈ6500 is really not that bad. She can manage that amount with a loan.

Little Bo Peep

Get your friend to sit down and make a list of everything that she pays out on a monthly basis, make sure she includes absolutely everything, mortgage/rent, all utility bills, debt repayments, food, Sky, mobile phone, car expenses if she has one or travel costs if she doesn't, clothes, haircuts, TV licence plus anything else that I haven't thought of. She needs to look at this list and see what she can do without and what she can drastically cut back on. A really good website to help with this is www.moneysavingexpert.com, they have forums and there is a board called Debt Free Wanabee, they have lots of helpful, practical advice on cutting down on your expenses. If after doing this she truly can't afford to make at least the minimum payments on her debts, then I would agree with what others have said and go to the CAB, they will liase directly with her creditors and can often arrange reduced payments. I think your friend needs to understand that if she wants to get out of debt and this vicious cycle of robbing Peter to pay Paul, her lifestyle may have to change drastically, obviously I don't know where she lives or her exact situation but to have outgoings of ВЈ2278 per month seems incredibly high to me? I hope you manage to help her sort things out.

HELEN D

the debt buster companies will help but this usually involves an IVA ( almost like declaring yourself bankrupt) and that will ruin a credit rating for a long time. even when the debt is repaid any loan applied for and accepted will probably be on a higher rate. your friend really really needs to economise and cut out none essentials. We all know what our non essentials are but they are hard to part with. It's not any easy road but cant be ignored.

suzanne m

Tell her to ring the Citizens advice bureau as they have a dept that helps with Debt.

pollywallydoodle

Gosh where is her money going . I would think she should be able to pay 6500 off, but she will have to tighten her belt somwhere. An iva is not an option as there is not enough debt. Her options would be a debt management plan or bankrupcy. Either she will still probably end up paying and wont be able to get credit, but that is for the better anyway. I think she would be best to go to the cab or the cccs consumer credit counselling service. i think the latter is the better one. they offer free help and advice and will help her with forms for bankrupcy if necessary or help to set up a dmp or maybe just help her to budget better.
All the best to her.

W Davey25

Cut the flamin cards, before you do anything, then you wont be tempted to use them again, contact the companies involved, explain the situation and work out a re-payment plan, it will take a long time to pay off all the debts, but it will be worth it in the end

Tattie_Soup

An excellent website for advice on this is www.fool.co.uk

They have a discussion board called "Dealing with Debt", where a lot of the regulars are professional insolvency advisers, they give out expert advice anonymously and for free.

There are other people on the board who have cleared much more debt than your friend without resorting to bankruptcy etc - your friend's outgoings are enormous and I'm sure they can give her advice.

If she goes there, the first thing they will ask her to do is fill out a Statement of Affairs - this is like a budget, showing her debt, income and outgoings. It is really important that she does this anyway - if she wants to go bankrupt or even to talk to her creditors informally, they will expect her to have done this.

Once this is done, they will look at her budget and advise her on what her creditors will consider "reasonable expenses" - she may have to cut down a lot and this could be a shock, so she will need you to stand by her.

Afterwards it may be clear that she can clear her debts without any formal arrangement, by snowballing - paying off the highest interest debt first and working down.

Otherwise, she may contact her creditors to arrange a DMP - this is a non-binding arrangement where creditors may agree to accept lower payments until the balance is cleared.

Another option is an IVA - this is a binding agreement that creditors vote whether or not to accept - you offer them an amount you can afford each month and after five years then the rest of the debt is wiped off.

As a last ditch option, they may recommend bankruptcy - but I doubt it in your friend's case as her debt is extremely low compared to her income.

I really think your friend's situation is redeemable - it is hard to judge without more details but I'm sure that they can help her. She has had what is called the "lightbulb" moment, and now that she recognises there is a problem she is halfway to fixing it.

The Fool website is a great site for general financial advice, and a supportive place to learn the tricks of Living Below Your Means. (LBYM).

No matter what she does, the first thing anybody she consults will want to see is a budget of the kind I mentioned before - so help her fill one in.

Remember, there is always light at the end of the tunnel!

ginger

I think the sensible approach to this situation would be for your friend to go bankrupt. In the long term its best, but in the short term she wouldn't have a bank account but it'll be worth her doing it as she'll have peace of mind.

shih tzu lady

My outgoings aren't that much and I'm 50, live in a 4 bed house and run a car!!! Just what is she spending all that money on!!!??? She is going to worry herself into an early grave. She has to cut her outgoings down by ВЈ1,000 per month to even break even. God knows how she's going to get out of that one! Extravagant lifestyle has to stop. Dont intervene by offering financial help - you will end up in the same boat. Take the credit cards off her.

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