A friend in financial pickle

Gucci

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An old friend of ours (62) has spoken recently of his increasingly troublesome financial pressures. His wife (61) can't work anymore through ill health. They tried incapacity benefit for her but were told she couldn't claim as her husband worked over 20 hours a week.

He's a carpenter in Cornwall which is a pretty poor county (outside tourism) and has had to travel out as far as Yorkshire to bring in work. They have already got to the stage where a debt management company has been brought in to deal with creditors. Of course, they take their share too along the way. They have a static caravan which is depreciating (although no mortgage).

Ultimately, if they hit the buffers, and lose everything, what happens next? Council flat for elderly? Other benefit? I've helped with a bit of money to help keep the wolf from the door, but know it's gone forever and only a sticky plaster on a gaping wound.

Would appreciate your thoughts?

Thank you

R
 

Scott_F

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The sale of the caravan should be considered a priority.

It's a depreciating asset that they can't afford. The money raised will keep them going for a while as well as relieving them of the burden of its site rental, insurance and other annual fixed costs.
 

developer

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As a general point pertaining to the private rented sector, and ignoring any health related benefit entitlements your friend may have, the "new" system for housing benefit (known as Local Housing Allowance) means as a couple they are entitled to a one bedroomed property.

They can rent any sized property they like, but the benefit will only be paid at the above rate. Any shortfall will have to be made by them.

Current LHA rates are published on the appropriate Council's website, under the Benefits section.
 

SPX

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You mention "no mortgage", by this do you mean that they own their home 100%?
 

Scott_F

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I think that I may have misunderstood their situation.

Do they own a house and a static caravan or is the caravan their actual home and their main asset ?
 

davidjpowell

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Hard to say, but don't expect much from the Caravan. The sites have these tied up very tight, and will take several pounds of flesh one way or another.
 

Colin_b

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I'd avoid the debt management company. Citizens advice will provide equally good advice without the fee, and will understand the benefits system better.

I assume from the debt management co. that they have debts that are difficult to repay/manage?

They need to prioritise the debts, and repay what they realistically can.

Look at what assets and income they have, and maximise their efficiency.

It is a relatively common situation, so they shouldn't worry about debt as a 'pride' matter -which they may, given their age. It is a series of financial transactions.
 

SilverSaloon

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sounds harsh but if their current income doesnt cover their current outgoings, then they should look to sell the property and caravan and downsize?
 

Dieselman

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I think the static caravan is their living abode.

The Chap probably needs to get a regular job in somewhere like B&Q.
 
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Gucci

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I think that I may have misunderstood their situation.

Do they own a house and a static caravan or is the caravan their actual home and their main asset ?
The static caravan is their actual home. Not worth much and difficult to sell on.
 
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Gucci

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sounds harsh but if their current income doesnt cover their current outgoings, then they should look to sell the property and caravan and downsize?
Not harsh to say. Just harsh reality I think.
 

A210AMG

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Nothing to say how to help only that I think its a pretty horrible situation to be in.

At their time of life they should be enjoying themselves and taking it easy. Money worries at any age isn't nice but this will no doubt affect their heath now also.

Actually the reply above about a B&Q job is pretty good?

What did his wife used to do? is work of any type out of the question?
 
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Gucci

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Nothing to say how to help only that I think its a pretty horrible situation to be in.

At their time of life they should be enjoying themselves and taking it easy. Money worries at any age isn't nice but this will no doubt affect their heath now also.

Actually the reply above about a B&Q job is pretty good?

What did his wife used to do? is work of any type out of the question?
She was a nurse and ironically more recently, manager of a care home for the elderly and a carer too. She's mentally bright as a button, but minor stroke (they think but not confirmed) meant weakness and lethargy.
 

finisterre

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can you buy the caravan off them and rent it back to them? Assuming they are going to lose it anyway and they can get help with rent then they would at least have a few quid to invest in business development, workshop rental, joinery advertising.
 

kth286

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Clearly his income is low and he is probably self employed, with nil profits.

There are benefits for that situation.

Also debts need to be prioritised and he needs to pay none that are not classed as essential ie. those that can you can be imprisoned for like Council Tax etc. OR those expenses that will cause you to lose your home ie site fees etc.

He can avoid the others and he needs to stop paying the debt company if there are fees involved as there are proper authorised agencies/charities around without fees.

He needs to realise that his credit rating will go to pieces, but the pressure will be off. The agencies will compile letters for him to communicate to his creditors, and he will not be pestered if he proves he has little in way of assets, as there is nothing to be gained.

The best bet is to get an appointment with CAB. May take some time as there is such a demand, but it will end up good.

There is lots that can be done to help with finances; and take the pressure off.

See Financial Conduct Authority website (ex FSA).
 

guydewdney

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should retired people pay income tax? 82 yr old neighbour pays ?20%? 'income tax' on his modest pension (ex council house, 2 grand car scale of income...)
{/hijack}
 

kth286

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should retired people pay income tax? 82 yr old neighbour pays ?20%? 'income tax' on his modest pension (ex council house, 2 grand car scale of income...)
{/hijack}
Total income determines amount of I/Tax if any.

I guess he has state pension and perhaps an occupational pension, and tax is being deducted from occupational income, because he has not got the correct code from inland revenue.

He needs to get a new tax code from Tax people for the occupational pension income.

There is a help line for pensioners and they can be issued with a new tax code there and then; and electronically send it to the occupational company to avoid any tax being deducted. (if the total figures fit)

I have seen that system work well.
 

guydewdney

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ah - yes - he worked for the Rivers Authority back in the day, which was a govt department, who couldn't possibly be expected to talk to hmrc.... :rolleyes:
 

Dryce

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should retired people pay income tax? 82 yr old neighbour pays ?20%? 'income tax' on his modest pension (ex council house, 2 grand car scale of income...)
{/hijack}
The principle of pension saving is that the pension contribution is not taxed and that gains on the pension fund are not taxed (though Gordon Brown played with that part a bit) - on the basis that you pay tax when you get pension income.

So you pay tax on the pension when it is paid to you on the basis that you put money into it untaxed.
 

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